PRELIMINARY FINANCING HOW
MUCH HOME CAN YOU BUY?
Take a close look at your credit report.
Your credit history is one of the principal measures used by a lender to determine your interest rate. The better your credit, the better lending terms your bank or lending institution will be able to offer you. A higher interest rate translates into a higher monthly mortgage payment, and so your credit score will directly affect how much money you can borrow and at which homes you should be looking.
You should be aware of what information is on your credit report by obtaining and reviewing copies of your credit report from the three main credit report agencies.
HOW DOES YOUR SCORE RATE?
Low Fair Good Great Exceptional
Below 620 620-690 690-740 740-780 Above 780
WHAT NOT TO DO
If at all possible, you should avoid making a major purchase or changing your job if you're seriously considering buying a home in the next few months. This may negatively effect your credit score.
The average credit score in the United States is 695. (December 2019)
Remember that there are several factors that affect your credit report including your payment history, your current ratio of debt to income and signs of responsibility and stability. And since not all creditors report to all three agencies, it's best to order a report from all three institutions. Your goal in ordering all three credit reports is to make sure that all of the information stated on each report is accurate and correct.
If there are any discrepancies on your credit report, it's important that you contact the rating agencies and have those records corrected. This will help you avoid hassles later on.
Page 2 Chapter 1