Home Loans California & Arizona

I have bad credit can I still buy a home is Rancho Cucamonga California?

September 21st, 2014 1:48 PM by Nathan Rufty

Three Ways That Your Mortgage Credit Score Affects the process of your chances of obtaining a Home Loan in Rancho Cucamonga CA.

If you're thinking of buying a home, you may have been thinking a lot about your credit score as well. Credit scores control so much of what we do in the financial world, but what does your credit score really have to do with your home loan in Rancho Cucamonga? There are two parts to your credit report, the credit scores and what is in the body of the credit report, such as late pays, collections, judgement, bankruptcy, etc.. and all of these factors effect how your credit scores are establish amongst the 3 credit bureaus.

Here are three ways that your credit score could impact your mortgage loan application.

Your Middle Credit Score Affects Your Ability To Obtain A Mortgage

The first thing your credit score tells a mortgage lender is whether your score is lendable at all. In some cases, if you have a very low credit score, you may not be able to obtain a mortgage until the overall credit profile is addressed.

Different lenders will have their own set of criteria for determining safe and unsafe lending situations. Typically, if your middle credit score is lower then 600, you may have a difficult time obtaining a home loan.

If you are concerned about a low credit score, do not despair - you will need to work a little to clean up the derogatory markets that appear through out your credit report. Some lenders will still lend to home buyers with lower credit scores (just make sure you are working with legitimate lenders and not mortgage scam artists). If time is on your side, you can work towards building up your credit score so that when the time comes to re-applpy for a home loan in the Inland Empire, your scores will be much more attractive to lenders.

Your Credit Score Affects What Type Of Home Loan in California You Can Obtain

The second item a lender learns from your credit score is which types of mortgage you qualify for. If a lender sees you as a higher risk, their underwriting guidelines may not necessarily allow to offer you a traditional home loan.

In most cases, if you have a credit score of less than 620, you will not qualify for a traditional  conventional mortgage though Fannie Mae or Freddie Mac. In addition, if you have a lower credit score, you may have to make a larger down payment in order to qualify for the type of mortgage that will meet your monthly budge.

Your Credit Scores Will Affect Your Interest Rate

The final thing that a lender learns from your credit score is what interest rate they will have to offer you. As a general rule, the higher your credit score, the lower the interest rate. In turn, lower the credit score the higher the interest rate and a higher down payment may be required.

However, with the higher credit score, does not always mean you will automatically receive a great mortgage rate. There's more that goes into the pricing of a home loan in California than just the interest rate, so watch out for additional factors like extra fees, mortgage insurance, lock-in periods, and so on.

Your credit score tells a lender a lot about what type of borrower you are. Ultimately, a higher credit score means that you'll be able to borrow money at a lower interest rate. But if your score is low, don't worry - there's a lot you can do to bring up that score before you apply for a mortgage, so do not throw in the towel just yet!

Every financial situation is different, so if you want to find out more about how your credit score and how it will affect your mortgage in your specific circumstance, speak with a local and knowledge mortgage professional such as myself. I welcome the opportunity to assist you with your home loan needs when applying for a purchase or refinance home loan i Rancho Cucamonga California.

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Posted by Nathan Rufty on September 21st, 2014 1:48 PM

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