Do you want to buy a Katy home but aren’t sure if your credit score is high enough? As a Katy real estate agent, allow me to fill you in on some details you should know before applying for a mortgage.
As Credit.com mentioned in a recent article, many factors go into getting a mortgage, but it starts with your credit score. The lowest a credit score can typically be for a FHA-backed loan is 600, and the low for a conventional loan is 620. However, if you’re barely squeaking by with a score in the 600’s, expect to jump through a lot of hoops. With a lower score, you’ll typically need a higher down payment.
Credit.com says that 680 is the unofficial minimum, but you should strive for closer to the 740 range, which will get you optimal pricing. The higher the score, the better your loan.
Wondering how you can raise your credit score if need be? Here are some tips that Inman News recently suggested:
- Always pay your bills on time. No ifs, ands or buts. If you have a hard time remembering to pay them, set up automatic withdrawals to prevent an issue in the first place.
- Keep your credit owed within limits. Don’t have your unsecured credit outstanding above 50 percent of your annual salary, and keep your credit card balances within half of the allowed limit.
- Always pay your dues on time, in full. Don’t get by with minimum payments. It’ll take forever to pay your debt down that way! Pay off your debt in full whenever possible.
- Use two credit cards. This is enough to show a mortgage lender that you are smart with your spending, as long as you’re paying the cards off as you go. If you have more than that, keep them open but don’t use them.
- Pay off high-interest loans and small loans first. Your personal loans, credit cards and private loans typically have high interest and no asset creation, so it makes sense to pay these off first.
- Close unwanted or unused savings accounts. These can affect your credit score over time.
- Check your credit reports regularly. If you see any errors, work toward getting them resolved.
For more tips, check out the Inman News article. If you follow this advice, hopefully your credit score will be in an optimal zone in no time! Then you will be able to contact a mortgage lender and receive a loan for a home purchase in Katy.