The Relationship Between Your
Credit Scores and Your Mortgage ...
More Than "Kissin' Cousins"
Recently I was reviewing a credit report with a prospective homebuyer. After going over a few different pieces of information together, we began to talk about differing mortgage programs available to him for his home purchase.
It's fair to say, that this young man's credit scores were ... well, shall I say, "challenged"? They were close to getting his foot TO the door of a new home, but not quite THROUGH that door. He had some work to do.
But it quickly became quite clear that my young client was not grasping just how his credit scores would be utilized and the very important part they would play in determining ... not only IF he could buy a home ... but WHICH mortgage programs, if any, would be available to him for his home purchase.
His comment to me was, "so if my middle credit score is lower than the guidelines allow, why can't you just use the highest score of the three?" Aaahhhhh ... if it were only that easy!
So for those reading this post and hoping to become a home buyer soon or in the future ... here are some basic, but important facts that you need to know regarding your credit scores and their relationship with mortgage programs ...
There are 3 credit bureaus:
The information found within your credit report(s) determines your FICO Score (an ancronym standing for Fair, Isaac and Company). Your FICO Score can range anywhere from 300 to 850. The higher the score, the better your credit is considered. The higher your credit scores, the more mortgage financing options you have. The higher the credit scores, the lower the interest rates you receive for your mortgage financing.
See what I mean about credit scores and mortgage programs being "Kissin' Cousins"?
When I am determining which mortgage programs are available to my borrower, it is the middle credit score (between highest and lowest score) that is key. It is their middle credit score that determines (allows or dis-allows) the use of any particular mortgage program. And again, the higher that middle credit score is, the more mortgage options available and the better the interest rate for their mortgage financing.
My young buyer learned quickly that his lower credit scores were going to be an obstacle to buying the home he wanted ... in the time frame he had hoped for. The good news is that I was able to suggest a few courses of action that will boost the two lower credit scores up above required lending guidelines in a fairly timely manner. And my buyer is lucky enough to be negotiating a sale with a patient builder that is willing to allot him more time in which to build his credit scores. All good news.
But what if this hadn't been the case? The "Kissin' Cousins" weren't able to smooch? There would have been no deal!
Knowing your credit scores is important. Whether buying a home or not. It's SO VERY EASY to obtain your credit scores ... and inexpensive to do so. And for potential home buyers it's absolutely essential to get educated about credit scores well in advance of starting the home search. I would suggest that anyone hoping to buy a home, run/research their scores (at minimum), ONE YEAR PRIOR to the date they hope to purchase a home.
I run FREE credit reports for anyone looking to pre-qualify for a mortgage loan with me. I also run FREE credit reports for my past clients, as part of my continuing mortgage service. Many other lenders do likewise. Why would anyone not take advantage of this FREE, important, and extremely beneficial service??
The relationship between your credit scores and your mortgage is a very close and important one. The relationship between your credit scores and the cost and availability of so many important services and products in today's world are ... yes ... more than "Kissin' Cousins".
Take charge of your credit scores today! Cozy up to them and get to know them better. Kiss and smooch them for all their worth. And contact me to get yourself started ...
* Get your credit report or FREE Mortgage Consultation today! Contact me through any of the easy and convenient means: Direct: 815.277.4036 Cell/Text: 708.921.6331
Email: gene@chicagobancorp.com Website: www.genemundt.com
Skype: 630.219.1316
Click Here 4 a: NO Cost NO Obligation Mortgage Consultation
Gene Mundt, Sr. Vice President
Personal NMLS #216987
The Federal Savings Bank
1823 Centre Point Circle, Naperville, IL 60563
Skype! 630-219-1316
We find that working with an experienced Mortgage broker to guide our clients throuth the process is invaluable.
Erv: I appreciate your comment, as a mortgage lender. Your support and believe that we can do good work with our clients is wonderful. I'm coming to the conclusion more and more often, that a relationship between the agent and lender is invaluable also ... and have been extending the invitation to agents to "sit-in" with their clients on the initial meetings between lender and client. I've had great success with these transactions as a result .. and the buyers have been very enthusiastic and stronger advocates on both my .. and the agents part after the closing, as a result. I mention it, as something to think about ...
Gene
Gene,
Credit scores are the basis of almost all decisions. Yes, critical to getting a mortgage. However, it also impacts one's ability to rent, insurance rates, how much a deposit you will need to turn on utilities, if you qualify to buy other consumer items.
Not having a decent credit score costs you so very much. Pay attention, stay in touch with mortgage lenders like yourself that can help folks be prepared to buy a home.
All the best, Michelle
Where's the "number" when in your opinion (and I realize I'm putting you on the spot asking for an opinion, and if you don't want to answer here please email me... when a score goes from being "fair" to "good" and there are no issues execpt income?
Exactly right, Michelle. Poor credit scores cost you way more than most people know .. and on a daily basis. Definitely making it worth the time, effort, and minor expense (if any) that is demanded to find out your scores and then improve them. Really appreciate your input on that!
Gene
Gene -- Good explanation of the situation, in a readable format that should help more potential borrowers get an understanding of the importance of their Credit Scores . Great program for keeping your former clients interested as well.
Thank Steven! Appreciate the thumbs-up, especially coming from another LO. Hope all is going well in your neck of the woods ...
Gene
Gene, we all have to take charge of our credit scores....great post and suggested.
Thank you Rebecca! And you're so right ... and it's important that we in the industry pass the word on to as many as possible. LOVE the pic and outfit! Thanks for writing ..
Gene
Another great educational post, Gene. You know where this one is going, don't you :)
I hope so, Jane!! lol And you know I adore you for it ...
Thank you ...
Gene