You want to have the best credit score when applying for a loan mortgage. Your credit score can have a huge impact on your loan. Your credit history will impact your loan rate, ability to get a mortgage loan, as well as the type of home loan program available.

Credit is an important factor in the home mortgage loan process. Therefore, it is crucial to understand how credit affects the home loan qualification process. You should also know your options to improve your credit score and credit rating before you apply for a mortgage loan.

Bankruptcy, Foreclosures

Insolvency and foreclosures can be negative factors on your credit report, which can impact loan approval. Depending on whether the bankruptcy is Chapter 7 or 13, one may need to wait between 2 and 4 years before a mortgage can be approved. FHA home loans can be approved by homebuyers if bankruptcy has been cleared for at most two years. Clients with a bankruptcy on their credit reports must have their credit reestablished with positive trade lines (new account) and no negative credit reporting to bureaus since filing bankruptcy.

The ability to qualify for a mortgage can be affected by foreclosures. Most home mortgage loan programs require clients to wait for at least 3-5 years after the foreclosure date before they are approved. When a mortgage company or mortgage broker in Windermere decide a mortgage, short sales can, depending upon how they are reported, be considered a foreclosure.

Judgments or Liens

A majority of mortgage companies in Windermere and loan program providers will require that any judgments or judgments on credit reports be paid in order to approve a loan. Tax liens need to be paid!

Credit Score

A credit score is a number that lenders use to determine whether you are eligible for a mortgage. For a mortgage application, it is essential to have the best credit rating possible. You might not be eligible for a mortgage if you have low credit scores. FHA home loans need at least 580 credit scores. Many companies won't approve FHA loans if the homebuyer doesn't have a 620 score. Conventional home loans require a score of 620. If your down payment is lower than 20%, however, you will need a minimum 680 to qualify for the loan.

How can you raise your Credit Score?

It is important to pay all credit debts in time. This will have a significant impact on credit scores. If you miss a payment, it will take 6-18 months for your score to recover to the level it was before the late. A missed mortgage payment can have a major impact on your ability to be approved for a refinance loan or to purchase a home. A lot of home mortgage loan programs won’t approve loans if you haven’t paid your mortgage payments in the past 12 months. Your score can also be affected if you fail to make your credit card payments.

Your score can also be affected by your credit card balances. Credit card balances that are too high will result in a decrease in your score. Credit card balances should be kept at 10% of your credit limit. You should not keep credit card balances higher than $300 if your credit card limit is $3000. You can improve your credit score by paying down revolving or consolidating it into an installment loan. Installment loans can be loans that are repayable after the term has ended. Installment loans cannot allow you to add more debt. You can only pay off existing debt and add new debt to a revolving loan.

Once the Mortgage has been Approved

Once you have been approved to get a home mortgage loan, it's important to remember that you shouldn't add any additional debts during the process. You may lose your ability to close your home mortgage loan if you add debts to the loan process. You should wait until your home loan is funded and closed before adding additional debt to credit.