CHAPTER 3 Getting That First Home Loan
Venturing into the housing market can be intimidating for anyone. Since the housing market crashed in 2007, the road to recovery has been rather uneven. This includes very tight lending, new requirements, and buyers held back by increasingly strict lending standards. There are signs of improvement in the housing market, though. Banks are relaxing previously strict minimum requirements, and lenders are offering mortgages with down payments at lower rates. This may very well be a good time to consider jumping into the market. With the housing market heating up and consumers ready to buy a home, it is time to begin preparing for the road that lies ahead of you.
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. The factors used to calculate an individual’s credit score are credit payment history, current debts, length of credit history, credit type mix, and frequency of applications for new credit. The different scoring systems are based on different criteria, weighted differently, so the three major credit bureaus in the U.S. (Equifax, TransUnion, and Experian) may produce different scores for an individual, even though the scores are based on the same credit 17
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