What is A Good Credit Score for First Time Home Buyers?

Buying your very first home may come as a breeze if you are someone who happens to have very good credit. You may not get turned down just because your credit score doesn’t categorize as “good” credit, but you will definitely not get the best interest rate out there. Good credit scores will definitely come in handy when you get ready to buy your first home. They definitely will look for good credit, but may give you an exception but will make your interest rate a lot higher. So what credit score is needed to buy a house? A good first time house buyer should plan on having a credit score around 700.

Credit Score for First Time Home Buyers

A 700 credit score will get you in the home you want and not just end up settling for something that you do not too much care about. Buying a first home may come off as a bit unsettling for some, or some may be a bit anxious about buying your first home. The best thing that you can do is a lot of research prior to buying your home. Your credit score will also matter a lot more if you are trying to buy a mansion versus just a tiny 2 bedroom house. The best piece of advice to give yourself is to just be mindful of those things prior to finding a home. You want a good credit score, but you will also want to make sure that you find a home that is in your price range and nothing out of the ordinary that will require you to have a very high credit score.

Once you begin finding something that is within your price range, do a little research to see what you think may me the best credit score in order to get approved for a mortgage loan. The process may not be as hard as you may think.

Mortgage Rates and Credit Scores

The following are a few facts about the relationship between mortgage rates and credit scores.

Credit scores can seriously affect your mortgage rate. For example, 720 is considered a good credit score to buy a house. Therefore, if a person had a credit score within the 700 range, they would most certainly receive a much better mortgage rate.

A customer applying for a mortgage with a credit score within the 500-600 range would certainly receive a higher interest rate then someone with an almost perfect credit rating. A poor credit rating is considered more of a risk to most banks and financial institutions. Therefore, the customer may still receive the mortgage however the interest rate will certainly not be as competitive.

Therefore, credit scores not only affect mortgage rates but they can determine interest rates on certain credit cards as well as the terms of certain loans. Prior to applying for a mortgage, it may be wise to obtain a copy of a personal credit report.

Credit reports give the consumer an overall view of their credit standing as well as the overall credit score. Some services are available through the Internet that will actually provide a yearly copy of a credit report for free.

There are also credit services available that will keep track in any changes in personal credit score. Once a change is detected in overall credit score, the consumer would be notified immediately.

High credit scores can certainly secure low interest rates on home mortgages. In addition, decent credit scores can also be quite helpful when a consumer is considering re financing options. The bank or financial representative can explain these options prior to applying for a new mortgage.

A first time mortgage applicant with a high credit score would more than likely be offered an interest rate which may be hard to match. An mortgage interest rate of 2.8-3% would be considered a competitive interest rate available to only certain individuals.