Many factors in your financial portfolio affect your ability to qualify for a mortgage loan. The most important factor is your credit score. A credit score is a three-digit number generated by a mathematical algorithm from the information in your credit report. It is designed to predict the risk and the likelihood you will neglect your credit obligations in the next 24 months.
There are different credit-scoring models, but the most common is the FICO® credit score. FICO scores range from 300-850, where a higher number indicates lower risk. Each consumer has three scores, one from each credit report provided by the three main credit bureaus: Equifax, Experian and TransUnion.
How does my credit score effect my interest rate?
The information on your credit report determines whether you will be able to qualify for a mortgage and the interest rate (APR) you will pay. Errors on your credit report can reduce your score, meaning a higher interest rate. A good tip is to check your credit report and establish a plan with your mortgage advisor to take care of any errors before applying for a loan.
Before you apply for a mortgage loan and right after your loan has closed, do not apply for additional credit. This will hurt your credit score and makes you look risky. Your credit score may also decline if you have too many credit accounts, so be wise!
What else affects my ability to qualify for a mortgage loan?
Some other factors affecting a mortgage advisor’s decision to qualify you for a mortgage include your credit history with them, the amount of debt you have accumulated, your savings, your assets and your current income. If you have any questions about qualifying for a mortgage loan, contact one of our mortgage advisors today at 1-844-77-vLoan.
If you are currently house hunting or looking to refinance, make sure you fill out a free rate quote to estimate your monthly payments and connect with one of our dedicated mortgage advisors. Don’t do mortgages like your parents did. Do it digitally, with vLoan.