Perhaps you’ve been looking at mortgage applications for a while now, but still haven’t taken the ultimate step. Your credit isn’t perfect, and you’re terrified of what it’s going to mean for your mortgage cost. Will it be as high as the interest rate on your credit card? Higher? Will you even be able to afford it? Or will they just reject you?
Before panic completely takes hold, try to relax. It’s not as bad as you fear, and better than you probably think.
Your credit score is a reflection on previous ability to pay outstanding debt and financial obligations in a timely fashion. The higher it is, the lower your risk. As a result, potential lenders offer their best, lowest rates to individuals who have the highest scores. But that doesn’t mean it’s hopeless.
Even if your credit is less than perfect, most lenders will have a program available to you. Sure, your rate might be higher than someone with perfect credit; but you'll still likely be able to afford it.
How can I be so sure? Well, it’s in the lender’s best interest to ensure you make enough money to cover your current obligations, as well as the amount you owe to them. They will factor this into both the rate, and the amount they are willing to approve you to borrow.
Before applying, it might be a good idea to make sure your report is accurate and up to date. Many people find reporting errors dragging their score down; once fixed, they can obtain a much better rate than they could before.
To check your report, it’s best to request a copy from one of the three major bureaus. Each of the three is legally obligated to provide you with a complimentary credit report every so often. You can look up the information for Experian, Equifax, and TransUnion online.
This post is simply a short overview of what you need to know when applying for a loan. Contact us today to talk more about mortgage applications, the process, and all the options available to you.