How Important is Your Credit Score When Buying a Home?

How Important is Your Credit Score When Buying a Home? Featured Image
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The title of this article is a pretty important one when looking for a house. 

And to be honest, the answer is pretty straightforward: Your credit score is very important.

Here’s why:

1. Check out emerging sub-markets.
Manhattan might be the holy grail of New York commercial real estate, but other boroughs are quickly gaining in popularity. Developers are quickly snapping up opportunities in markets like Brooklyn, Queens, and the Bronx. With lower rents, easy access to transit, and a delightful walk-ability, these thriving boroughs are ideal for those looking to get into New York’s commercial real estate.

2. It will help determine the type of mortgage you’ll get.
Depending on your score, you might only qualify for certain kinds of loans. While each loan comes with its own rules and regulations, credit score is a big part of the decision for the type you can get. Here are some typical FICO scores for the different mortgage types:580+ credit score – FHA Loan

a. 580+ credit score – FHA Loan

b. 620+ credit score – VA Loan

c. 640+ credit score – USDA Loan

d. 620+ credit score – FHA 203 Loan

e. 620+ credit score – Conventional Loan

3. It will determine the interest rate you pay.
The better your credit score, the lower your interest rate. It’s pretty straightforward. Sure, lenders do look at other things like your credit history, collateral, down payment, etc., but the credit score is the big one.

4. It will determine if you have to pay PMI.
If you have a lower credit score and/or go with a loan like an FHA loan, you can put down a much smaller down payment than with a conventional loan. But while that can help you afford a home without saving for the full 20% down payment, you will have to pay mortgage insurance (PMI) in addition on top of your mortgage payment.

Ready to start the home buying process? Talk to a Dime mortgage specialist today.

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