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One thing that ultimately influences your mortgage rate is your credit score.

For first time home buyers, many aspects of home buying can seem daunting. We’re here to explain how your credit affects what mortgage rate you may be given once you decide to buy a home.

One thing that ultimately influences your mortgage rate is your credit score. Basically, the easiest thing to remember is: the higher your credit score, the lower interest rate on your mortgage.

A high credit score not only guarantees a lower mortgage rate, but sometimes it depends on whether you can get a home loan at all. Buyers below a FICO score of 620 have a miniscule chance of securing a mortgage, so step one to getting a home loan and low mortgage rate is working on that credit…

Many buyers think that an FHA loan should only be used as a last resort. Indeed, more often than not conventional loans are the way to go over FHA (which stands for Federal Housing Administration) loans. However, if you’re only able to put 3% or 3.5% cash down on a property, an FHA loan could make more sense for you. Home prices in the DC area have skyrocketed in the last few years, and with that comes more difficulty on the part of buyers to put a greater percentage down on a property. What exactly are the pro’s and con’s of FHA loans? Well, that’s exactly what we’re here to tell you:

Pro’s:

1. The buyer only has to put down 3.5% of the total sales price on a property.

2. 100% of the down payment can be a gift from a family member, friend,…

Your personal finances are a critical part of securing a mortgage. One important part of your finances is your credit; a higher credit score can lead to a lower cost mortgage.

It’s important to have open lines of credit with no debt, which can increase your credit score. Lenders typically look for at least three open trade lines, such as a Mastercard or department store credit card. Paying your credit card bills on time leaves your credit report with “paid current” for each line of credit and no derogatory items or delinquencies. It’s also critical to show a consistent payment history over time, so keep your credit accounts long-term. 

On the other hand, payment obligations can reduce your ability to qualify for the mortgage amount you want.  If you…