If you have plans of buying one of the beautiful homes for sale in New Orleans, LA, a good credit score will take you closer to your goal. Your credit score is a strong indicator of your capacity to handle financial obligations. The higher it is, the more trustworthy you appear to lenders and home sellers. Moreover, if you take out a loan, you’ll have more lending institutions to choose from offering a selection of great terms.
Here are things you need to know about your credit score in relation to buying a home:
Credit scores and payment behavior
If you are the kind who can pay debts completely and on time, this will reflect on your credit score. This is usually measured on a scale of 300 to 850, with 850 being the perfect credit score.
Equifax, Experian, and TransUnion are among the reliable agencies tapped to review your finances and provide credit scores. To grade you accurately, the said agencies will investigate your payment history, past loans, and credit card usage, among others. The higher your financial bottom line and your payment behavior, the better your score.
Ideal credit score for a mortgage
According to BusinessInsider.com, an ideal credit score will depend on the lending institution you approach, as well as the loan type you’re applying for. Whether your credit score is on the higher end of the scale or barely in the green, there is a likely chance that there will be a corresponding loan type for it. There are even home loans available for those whose credit scores fall on the much lower end of the spectrum, although the required down payment and monthly dues could be steeper than usual.
Of course, the higher the credit score, the better the loan terms. A score between 700 and 850 is most desirable as lenders will be more willing to give you a loan with lower interest rates.
Credit scores and COVID-19
An individual’s credit score largely depends on their financial activity. But what if unemployment due to the ongoing COVID-19 pandemic has slowed down that activity?
Naturally, the impact would be a drop in one’s credit score. However, financial experts say that this should be the least of your problems. The priority is to attend to the basic needs first; credit scores later.
The good news is that many lenders are offering some relief in terms of monthly payments. All you need to do is to inquire from your lender about these relief packages that could momentarily extend the payment deadline of your mortgages or bring down the monthly payments. Moreover, if you have a federally backed mortgage like an FHA or a VA loan, you can apply for forbearance under the CARES Act.
If you were granted forbearance in your mortgage, the CARES Act will also protect you from being slapped with a negative report in your credit, essentially keeping your credit score safe and still in the green. For better results, you should discuss this form of economic relief with your chosen lending entity.
Also, don’t hesitate to discuss credit scores with a reputable Realtor in New Orleans, LA like us, the Axis Realty Group. That way, we can help you in improving your credit score for the home of your dreams among the homes for sale in Metairie, LA. Call us at 504.336.3000 or email us at Nicole(dotted)AxisRealty(at)Gmail(dotted)com to get started.