When purchasing a home, you may look to your friends, family, and the internet for advice. Unfortunately, some of that information may lead to some of the most common home-buying myths – especially when it comes to credit.
Home-buying Credit Myths
Myth #1: You must have flawless credit to buy a home.
Fact: While it is true that an individual’s credit score has an impact on the mortgage loan approval process and ultimately the resulting interest rate, perfect credit is not needed to get approved for a mortgage loan. Credit scores can range widely, the higher the credit score, the more options you will have to find a mortgage with favorable interest rates.
Myth #2: Lenders have the right to share your personal credit information.
Fact: This is not so. Generally a lender must have your permission to share your information with an affiliate (any entity that is involved in making, holding or investing in bank loans or credit extensions). Luckily state and federal privacy laws are in place to help protect your personal information.
Myth #3: Lenders only use one scoring model that determines creditworthiness.
Fact: There are many credit-scoring models used to determine credit risk in today’s marketplace. For example, many lenders use the VantageScore as one model for determining credit worthiness. While scoring models vary, many of the same factors influence your credit score, including your payment history and your level of debt.
It is a good idea to determine what you can comfortably afford to pay each month before you start house hunting. Even if you are pre-approved for a mortgage, you may want to consider if the mortgage is affordable. Pre-approval gives you the ability to determine a budget that fits within your means. Understanding the factors that are important to a mortgage lender can improve your chances of finding your dream home.
For any additional advice or myth busting call Wedowee Lake & Lands Realty, LLC. Our honest experienced professionals are here to assist you and make the home buying process one you will truly enjoy!