Don't Forget to Check Your Credit Score When Buying a Home
Finding and buying your dream home is one of the happiest times of your life - it can also be one of the most stressful.
Usually, there's a long list of things to consider when looking for a home. If you have a family, you may want one with just the right surrounding neighborhood or schools. For growth and home décor, you may want to find a house with a specific number of rooms or a large yard.
With all these things to consider, you might forget to add checking your credit report on that long list of to-dos. Without a good score, you might have to settle for something less than your dream house.
Why Check Your Score When Buying a Home?
When it comes to buying a home, your credit score is a major factor in the process. Just like with any other purchase that requires financing, lenders look at a list of reasons they should or shouldn't approve your application — this includes your credit score.
When most homebuyers start shopping, they often overlook or don't know what's on their report. It's always best practice to check your credit score before talking with lenders about homes you're interested in.
Good Credit and Buying a Home
According to Mainstreet.com, the better your credit score, the more it helps now and in the future. Look at these differences in rates on a 30-year fixed-rate mortgage with varying scores:
- A score of 760-850 could earn you a 4.267% rate
- A score of 660-670 could earn you a 4.88% rate
- A score of 620-639 could earn you a 5.856% rate
This means, if you came in to the home loan negotiation for a $250,000 home with a higher score, you could save around $29,000 during the first 10 years.
Watch Your Credit While Applying For Home Financing
What you do before, during, and sometimes after you finance a home can hurt you. This is why it's important to check your credit score to ensure you have the best shot at getting that home loan you're looking for. When it's time to start hunting for home loans, remember:
- To check your score from all three reporting agencies to see any discrepancies between them. The three agencies include: Equifax, Experian and Transunion.
- After finding your score and possible rate information, consult a home mortgage calculator and look at what your monthly payments could be. This is a great way to make sure you're ready for the payments that lie ahead with home ownership.
When it comes to buying a home, there are many factors you must consider. Among one of the top considerations is checking your credit score before you venture out for a home loan. Having a higher score not only helps you secure a loan, it can also save you money down the road as well.
If you're looking to buy a home and need to check your credit score, FreeScore.com is a good start.
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