Homebuyers across America rely on mortgages to buy their dream homes. That’s why it’s so important to take the time to get pre-approved or pre-qualified way before you begin looking for Tampa Homes for Sale. Getting this pre-approval will help you determine how much you will be able to spend on a new home so you can set a budget and start your search. But, to get approval you have to get a credit check, two words that sent shivers down many people’s spines. What kind of credit score do you need to get a mortgage? Is yours good enough?
First, a little about credit scores.
Your score can range anywhere from 300 to 850, but the higher it is, the better. Scores are broken down into different categories as follows:
- 300 to 599 is considered “very bad”
- 600 to 649 is considered “poor”
- 650 to 699 is considered “fair”
- 700 to 749 is considered “good”
- 750 to 799 is considered “very good”
- 800 to 850 is considered “excellent”
Many people find out their credit is considered “very bad” or “poor” and instantly give up on their quest for a mortgage, but don’t make this mistake. You don’t have to have perfect credit to get a mortgage, so it’s always worth a trip to your lender to talk about your options.
Now, on to getting a mortgage.
Industry experts say this year, the majority of lenders will approve applicants for a FHA-backed loan even if their credit score as low as 580. But, if you want a loan that is not connected to a government agency, you will need a slightly higher score. Usually, for these loans the minimum score is around 620.
Keep in mind the lower your credit score, the more hoops you may have to jump through in order to get approved for a loan. If you want to avoid these extra obstacles, financial experts recommend taking the time to build up your credit to a score of at least 740 before you even apply for a loan. This is considered the ideal score by lenders, so you should be able to get through the approval process much faster with this on your report.
If you don’t want to wait and choose to move forward with a low credit score, it’s recommended that you try to save up more of a down payment to show banks you are serious and not as much of a risk as your credit score makes you appear.
Everyone who is applying for a mortgage should remember it’s never a guarantee that you will approved—even if your credit report is clean. Credit scores are just one of the many factors that go into the decision to approve an applicant. But, the higher your score, the better chance you will have of getting approved.
Ready to find your dream home? Contact our team of real estate experts at Coast 2 Coast Realty who have years of experience assisting buyers in the Tampa area with their search.