If you’re thinking of buying a home, you probably have a million thoughts running through your head, and I’ll be at least a few have to do with credit. With our current gutter economy, the more information you have, the better off you’ll be. So let us then examine just how your credit can affect your home purchasing power.

If You’ve Got It, Flaunt It
If you’ve been a responsible person up till now, and find that you have good credit, you want to make sure that you’re recognized for your fiscal efforts. The high FICO score you’ve obtained will play a huge role in what sorts of interest rates you’ll be offered during the home mortgage loan process. If you’re unsure of your credit score, you can get a copy of your credit report free (once yearly) from all three of our major credit reporting agencies (Experian, Equifax, and Trans-Union).

Scores of 619 or are listed as “Poor”, whilst the average American will have a credit score of between 620 and 659. Good credit scores range from 660 to 749, and if you have a credit score of 750 or above…you can be sure that you’re entitled to the best financing offers out there.

How Do Lenders Decide How Much Money to Lend?
Debt to income ratio is the first thing that most lenders will look at. They compare the amount of your gross income (that is before tax) with the amount of your Housing vs. Non-housing expenditures. Non-housing expenditures include those long-term debts such as a car or student loan, alimony or child support, or credit card balances. The FHA states that a mortgage payment should not be more than 29% of your gross income and that the Mortgage payment, when combined with your non-housing expenditures, should not exceed 41% of your overall income. Of course things like down payment, closing costs, credit history, and a slew of other factors will be considered by the lender when deciding the maximum amount that they would be willing to lend.

Of course the old adage is still true that “Location, location, location” plays an important role in your ability to sell AND PURCHASE a home. Believe it or not, though the lending standards are considered equal across this nation, some areas have suffered a great deal more from the current economic turmoil, and taking this into consideration, you might find you stand a better chance of being financed for a home in a different location. It pays to shop around…literally!

Breaking It Down
If you don’t have the best credit, it may seem a bit cumbersome to get an unsecured personal loan, but it’s not impossible. Besides what we’ve mentioned so far, there are other things that can affect your credit score such as the amount of time you’ve lived your current residence or the amount of time you’ve worked for your current employer. Sometimes all that’s needed to raise your credit score is time.
Buying a home can be a stressful, and at times, terrifying experience, especially with the current economic uncertainties, and if you’re not sure if you’ll have a job tomorrow, that can add to the pressures you’re feeling, but it is not impossible to get into the home of your dreams. You simply need to be aware of how your credit score plays a role in the process of buying a home, and then have patience as you work through the process of finding what sort of financing option will work best for you.

Posted By Lewis Van Tassel
Lewis is the Education Manager for MDJustlisted.com
specializes in Columbia Md Real Estate
and Baltimore Md Real Estate