Credit scores are a common source of nerves and confusion for our clients at the mortgage desk. Even if owning a home is one of their biggest dreams, some people avoid getting their hopes up because they feel that their credit score is too low.
So, what credit score do you need to get approved for a mortgage? While there isn’t an easy answer to this question, we want you to know that if your credit score doesn’t impress, there’s still hope. Let us put your mind at ease as we share some must-know info about the relationship between credit scores and mortgages.
How Does My Credit Score Impact My Ability To Get a Mortgage?
If your credit score leaves something to be desired, it can:
- Affect your interest rate: Low credit scores often lead to higher interest rates for mortgage applicants.
- Prevent you from getting a mortgage: Occasionally, a person’s credit score is too low to receive a mortgage, especially when combined with other factors.
We won’t lie: If your credit score is lower than low, your options might be limited or nonexistent. However, if you’ve struggled with low credit in the past but are working to get your finances on the right track, don’t give up on a mortgage.
Factors That Influence Your Credit Score’s Impact
A low credit score might not have the same consequences for everyone. At MortgageDepot, we examine each client’s financial situation carefully to match them with the best loan product for their needs. Here are a few things we consider as we connect our clients with a mortgage:
- The type of mortgage: There are specific loan products targeted at buyers with low credit scores.
- The buyer’s down payment: If a buyer has a low credit score but a high down payment, this increases their loan options.
- Whether the transaction is a purchase or a refinance: If you purchased your home with a low credit score, it doesn’t mean refinancing will be smooth sailing.
The Good News!
If a low credit score is the only red flag on your financial records, you might be surprised at the number of loan options available! FHA, USDA, and VA loans are the ones to watch.
Are you worried that your financial past will be a problem at the mortgage desk today? Contact us to learn about loan options for buyers with low credit scores!
Connect with one of our loan consultants for more information.
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