Buying a house is a difficult yet rewarding process. At the end of it all, your Orlando realtor hands over the keys to the house, and you get to call yourself a homeowner. Your happiness knows no bounds! Those who have been through this process know that things can get a little tricky even before you start your search.
We are talking about your credit score with the power to make or break your dreams. It’s the most important thing in the house buying process as it decides whether you will be able to afford a house or not.
How Does Your Credit Score Factor Into the House Buying Process
Your credit score is a number given to you based on the regular payments you make in your life. These include utility bills, credit card bills, etc. A credit reporting agency monitors how well you handle these expenses and then assigns you a score under one of the five categories, which are as below:
|Credit Rating||FICO Score Range|
|Very Poor||300 – 580|
|Fair||580 – 669|
|Good||670 – 739|
|Very Good||740 – 799|
Based on this credit score, a lender decides whether you are worthy of a loan or not. Since you will be taking out a mortgage for buying the house, the lender looks at your credit score to find out if you fulfill your financial obligations.
Understanding Credit Score Categories
|Very Poor||Your score is lower than the average score limit. This rating shows that you cannot be trusted with a loan.|
|Fair||Your score is still below the average score limit, but you have a slight chance of getting approved for the loan.|
|Good||Your score is somewhat above average, which is good enough for the lender to give you a loan.|
|Very Good||Your score is not in the average score limit and shows the lender you handle your money well and will pay back the loan on time.|
|Exceptional||People rarely have this score. In this credit score range, you can buy any house, anywhere. The lenders will give you a loan happily and even throw in a few incentives so you pick them.|
The lower your credit score, the harder it will be for you to get approved for a loan. This doesn’t mean you can’t buy a house. There’s another option ― a bad credit loan. The loan’s name itself is pretty self-explanatory. You can get a loan while having a bad credit score, but there’s a catch. You will be subjected to extremely high interest rates that will increase the monthly payments.
In our opinion, you should never take such loans. After a while, making the monthly payments becomes difficult, with all the taxes, house maintenance fees, and insurance added to them.
If you are looking for quality Orlando real estate, visit the website Megan Dowdy Realty. Get in touch with our Windermere Florida realtor to find out more about the house buying process. For further information, call 407-509-9279.