Get A Lower Mortgage Interest Rate
Good credit scores are important when obtaining financing for the purchase of a home. Mortgage lenders determine interest rates and your particular risk by reviewing your credit scores, current credit available and credit history. This said, it is worthwhile to know your credit rating in order to gauge the approximate interest rate that would be provided to you. Also, it is wise to remove any derogatory filings from your credit prior to interviewing mortgage bankers and brokers. Just a few tweaks can alter the interest rate provided and save you thousands of dollars over the course of the loan. If you feel there is something on your credit report that is not from you then you can dispute errors on your credit report here.
Six items that will help ensure your credit is healthy are as follows:
Late payments and delinquencies are the biggest factors that determine your current credit score and, in turn, the mortgage rate that will be offered. Late payments and delinquent balances make up approximately 35% of an individual’s overall credit score.
Late payments and delinquent balances will affect the type of loan and interest rate offered. You may want to get Everyday Loans to make sure you pay your mortgage. If your credit shows delinquent balances owed then it will be wise to pay off the balances prior to applying for a home loan. Get OnQFinancial va home loans assistance if you are eligible to apply for it.
Debt to Income Ratios:
Along with reviewing your overall credit rating, a mortgage lender will also review how much credit you have and how much credit you are currently using. For example, if you have accredit card with a credit limit of $1,000 and you consistently have a $950 balance then a mortgage lender may feel that you are “stretched” on your personal finances.
Rule of thumb: keep the amount you owe 40% or under your current credit limits. Doing so will show that you are not stretching your finances too thin and will provide your mortgage lender confidence that you can afford a new monthly payment.
Sent to Collections:
It is important to review your credit report in order to ensure that you have no collections reported. If so, make certain to remediate the collection prior to applying for a home loan. In order to purchase, a mortgage lender will require that all collections are paid in full.
Bankruptcy, Judgments or Liens:
Most should be aware of any bankruptcies, judgment of liens that may have been placed against you. However, it will be important to review your credit report to confirm prior to seeing a mortgage lender. The public records section located w/in your credit report will supply this particular information. (Source: www.checkpeople.com/public-records)
Closed or “never opened” credit accounts:
Ensure that you scan your credit report to ensure that any old or unused credit account are closed and that the closed dates are correct. It is also important to make certain that you do not have any credit accounts that you do not remember opening.
Upon viewing yoru credit report you will notice a section which discloses who has been viewing your credit rating and report. “Hard” inquiries (car loans, credit card application, etc) will typically affect your credit rating (albeit minimally).
A “soft” inquiry is when an entity views your credit report to verify that you have credit. Examples of “soft” inquiries consist of: home rental applications, mortgage applications and other types of credit inquires in which you do not need to obtain credit. Soft inquiries typically do not affect credit scores.