How many times have you heard the expression that “Cash is King”. I am here to tell you that when purchasing a home, this no longer applies. CREDIT is the new king! Credit score is incredibly important when making a home purchase or even a home refinance.
Credit score determines your eligibility, however, many people do not realize it also determines your rate. The better your score, the better your rate.
A number of Banks will not look at your loan if you do not have a credit score or you have a lack of credit trade lines (accounts).
Many times we see borrowers that have worked very hard to keep their debt under control and in doing so, did not open credit accounts. Sounds like a solid plan, right? Not the case, the Banks want to see your commitment in paying back your liabilities and want to see some credit history.
FHA will take “alternate trade lines” into consideration but they do want to see either a 12 month rental history paid by check or some other type of living expense that can be verified such as renter’s insurance.
It is always helpful to talk to a Mortgage Professional before you find that perfect home. It should be the first step a buyer takes, it prevents a lot of problems down the road and we can assist in preparing the buyer for their purchase.
