Buying a home for the first time is a big first step in anyone’s life. The process may seem overwhelming at first. With so many things to consider, many prospective homeowners wonder what type of first time homebuyer mortgage options exist in Thousand Oaks.
But in order to obtain a mortgage, first you have to be approved for a mortgage. The first step in finding a suitable mortgage program is to understand what lenders use to approve financing for first-time homebuyers. There are many factors, and credit scores usually rank at the top of the list.
Basics of Credit Scores
Credit scores act as a barometer to determine your creditworthiness. Scores typically range from 300 to 850, and the higher the score, the more likely you will qualify for financing at a low-interest rate.
Several factors influence your credit score, including the length of your credit history, amounts owed, payment history and any delinquent accounts. Credit scores play a big part in whether lenders extend you financing and at what interest rate.
Qualifying Credit Scores
There is no hard and fast rule on the credit score you need to qualify for a mortgage. However, a good median score is 660, which is not great credit, but it is not bad credit. In order to prepare your score before you apply for a mortgage, you want to strive for a score above 700. Any score above this threshold practically guarantees qualification and a good interest rate.
Products/Services for First Time Homebuyers
Many programs exist for first time homebuyers. The best place to start is with the Federal Housing Administration. This government agency caters to low-income and first time homebuyers. The FHA does not extend financing, but they do insure mortgages in the event you default on your loan. Banks and mortgage lenders actually extend the financing for your new mortgage.
So the simple advice is usually the right advice: find out your credit score, and if it’s low, take steps to bring it up.
For more questions regarding credit scores, contact a qualified mortgage professional for assistance.