When you express interest in buying a home one of the first things that you will be asked, whether by a realtor, a home owner, or a mortgage broker or lender is about your credit. You just cannot get away from your credit when you want to apply for home loans so if you don't know what your credit is you should be prepared to find out! Your credit is an important part of buying a home because it determines, in large part, whether or not you are worthy of financing from a lender.
Understanding How Your Credit Affects Buying a Home
When you apply for home loans you are asking for more than just a couple of dollars, and because of this lenders have to choose wisely when they are considering those that are asking them for money. If a lender simply gave out money to everyone who asked they would be broke in a hurry because not everyone is going to pay them back. Every time someone applies for a loan the lender has to decide if the person is worth the risk that is involved with lending a person that they don't know money.
It wouldn't be fair for a lender to decide that everyone with a certain hair color or eye color would get the home loans that they needed and it wouldn't be fair for them to decide based on the rate or gender of the person. The only way for the lender to determine who is worthy of the financial support and who is not is to look at the past credit choices of the individuals who are applying for loans.
Depending on the type of loan that you are applying for, your actual credit score may not matter much. For instance, when you apply for an FHA loan your credit report is pulled and your credit choices in the past are considered, but you do not have to meet a minimum credit score to be approved for the loan. With more conventional loans you have to have a certain credit score to qualify. For instance, if you need to have a credit score of 650 to qualify for the loan and your credit score is 649 you would not get the financing that you needed.
One thing you should know is that not all credit blemishes are looked at the same way when you are applying for home loans. You should do your best to pay all of your bills but if you have old medical bills on your credit report but you have been good about paying your credit cards, auto loans, and that sort of thing you will be in good shape. If you have had bankruptcies and foreclosures you may find that it is a little bit more difficult to get home loans. The great thing is that there are a lot of programs out there, giving just about everyone the chance to own a home. If you would like to own a home, give it a shot. The process will start and end with your credit, so if you know it is not good, you may want to take some time to build it up a bit so you have a better chance of getting the loan that you want!
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Frequently Asked Questions
Is it smarter to have your acct. In a credit ...
By: gale andersen | 24-07-2008
Is it smarter to have your acct. In a credit union?
Who insures Federal Credit Unions, FDIC or ???
By: CB | 23-07-2008
Who insures Federal Credit Unions, FDIC or ???
Is no credit good or bad?
By: iamarealperson2 | 23-07-2008
If I have no credit at all, then what do I have to do to establish my credit?
Bankruptsy?
By: moneta | 23-07-2008
I have 2 morgages and can't sell one house, Bankruptsy?
Is there a questionaire for us that allows us to BUY STOCKS ACCORDING TO OUR PREFERENCES?? ...
By: rsps4115 | 23-07-2008
Is there a questionaire for us that allows us to give our criteria such as, (goals?, NO FUNDS?, MONIES TO INVEST?, ARE THERE DIVIDENDS.? What is p.E. Of bus?, ETC. Etc. Etc.?? And out pops 10 - 20 stocks recm. To buy??? What web site would have such a quiz ?? Aol, google, yahoo, etc. ?? Please send answer to p.S.S. Rsps4115 @aol.Com thank you
I am 517,000.00 in mortgage debt with a 385,000.00 ...
By: tiggersono | 23-07-2008
I am 517,000.00 in mortgage debt with a 385,000.00 home. I can make the payments but not for long as my arm went up 900.00 per month and will go up again. I have a couple options. 1 I can bust my butt and try and pay it for as long as possible. 2, I can quit paying and hope that my mortgage company will work with me on a loan modification(they have not so far, I have really tried) 3 I can walk away and get another home on my spouses credit. What would you do?
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