For the majority of home buyers one of the major considerations is the mortgage necessary to purchase the property. Most real estate investors have neither the funds nor the desire to pay cash for property and indeed with interest rates as low as they are for home mortgages it would be financially foolish to tap into funds that can earn more interest income to pay cash for a home. The home buying process can be a little daunting, especially for first time home buyers who haven’t had the experience yet.

For those considering purchasing a new home it is crucial to stay updated on the changes in the mortgage industry, especially considering that the government guarantees the vast majority of home mortgages and is constantly altering its rules and guidelines for loan approvals for home loans. In April, the FHA actually changed several of its mortgage guidelines and rules including a requirement that increases mortgage insurance costs for home buyers using the government agency to back their real estate loans.

There are several factors taken into consideration by mortgage brokers and lenders when analyzing information in order to approve a home mortgage, not the least of which is your credit score. Many people are unfamiliar with the credit scoring system and have no idea what can help or hurt their credit score some of the more common issues that can lower your score include the following:

  • Bad borrower behavior such as late credit card payments
  • Foreclosures
  • Bankruptcy
  • High credit balances

Since the majority of home mortgages are backed by the government mortgage agencies like Freddie Mac and Fannie Mae the lenders processing these loans have to go by the lending guidelines provided by the government agencies. Even though the FHA will consider FICO scores that are under 600 you can expect it to cost you in the form of a much higher interest rate than someone with a higher score above 700. As long as your debt ratio and income are inline a higher credit score gives you some leverage and increases your buying power by allowing you to aggressively negotiate with lenders. If you do have a lower score you can help overcome it and get a lower rate by putting more money down which shows the lender that you have a significant financial stake in the property.

If you are considering purchasing a new home or condo in Myrtle Beach or the surrounding areas soon it is crucial that you make sure that your credit is up to par and if it isn’t then you need to focus on repairing whatever the problems are. The government mandated that all consumers are allowed a free credit report once per year so if you haven’t checked yours lately go to FreeCreditReport.com or AnnualCreditReport.com to see where your credit score stands.

Contact us at 843-424-6900 for a list of our preferred mortgage partners.