CHAPTER 3 Getting That First Home Loan
Navigating the housing market can feel daunting-especially for those who've faced challenges with mortgages in the past. Stricter lending standards, introduced in response to past lender practices, have made qualifying for a mortgage more difficult in recent years. However, the landscape is beginning to shift. Signs of improvement are emerging as banks ease some of their stricter requirements, and lenders begin offering mortgage options with lower down payment thresholds. With the housing market gaining momentum and more buyers entering the scene, now may be a promising time to take the leap. If homeownership is your goal, this could be the perfect moment to start preparing for the journey ahead.
THE CRITICAL IMPORTANCE OF A GOOD CREDIT SCORE
Your credit health is the most important factor in deciding what interest rate you will pay on your mortgage, and the difference could be substantial. Your credit rating’s impact is so significant that the difference could be in the thousands of dollars, just from a few points on your credit score. Consider this example. Let us take $178,500 as the price of a home. Two buyers buy at that price and both take a 30-year fixed mortgage. They both put 20% down. One buyer has a low credit score of 620, while the other has a higher score of 760. The one with the lower credit score will end up paying an interest rate as much as 3.5% to 5% higher. This difference could translate into 18
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