NJ First-Time Home Buyers


Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

Understand Your Credit ScoreIf you are a first time home buyer,you have no doubt come across the fact that your credit score is one of the most important factors regarding your mortgage options. With the way this country revolves around money and finances, you would think that understanding the credit scoring model would be required education. Instead year-after-year we see the same ignorance towards credit.

The basics for credit need to be understood by all. Even those with great credit scores need some background on understanding the credit scoring model.

Mortgage programs in relation to credit scores.

Credit scores range from 350 - 850. The higher the credit score the better. The majority of mortgage programs today require a score of  620 or better. Some mortgage programs will allow scores below a 620 credit score, but these are limited and may not be the programs you need. Ideally you want as many options as possible, and the higher the credit score the more mortgage options you will have.

Credit scores do not always relate to lower or higher interest rates. For instance, if you choose to use an FHA mortgage to buy a home, the rate will be the same if you have a 720 or an 820 credit score. Most lenders will also give you the same or very close rate with a 620 credit score.

A conventional loan on the other hand requires more money down, has stricter guidelines, and has several price and/or rate increases depending on the credit score. A low credit score when utilizing a conventional loan can very quickly become expensive because of increased rates and costs. That is if you can even utilize a conventional loan. Many people are currently priced out of the "conventional loan" market due to their credit scores.

Mortgage insuranceis another credit related mortgage necessity. Mortgage insurance is required on a conventional loan with less than 20% down payment, and depending on one's credit score, even though a conventional loan may be a possible option, if there is no mortgage insurance company that will offer you insurance coverage because of a lower credit score, you can not use a conventional loan. Credit scores really can rule the day.

The good thing is that FHA loans are often there to save the day and offer great rates and low fees.

Education IS the key (to home ownership)

Now that we understand some of the ways that a credit score can determine what options are available for mortgage financing, it is now up to you to take about an hour to read up on the credit scoring model and how to obtain and maintain a great credit score.

Don't leave this important aspect of your life a mystery. A few minutes of education here will serve your life finances well, and long term will save you thousands and make a big difference in your life and the life of your family.

Additional articles for a better understanding of credit scores and the credit scoring model

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Comment balloon 2 commentsStephen Kappre • August 18 2009 11:08PM


Steve - Great info regarding credit scores as part of this series !  Great links too !  How come the woman has the highest credit score in the picture ?  LOL, I think that is typically the way it is : ) .  When I was young and dumb,  I did not know anything about credit scores and had to do some things to take care of it to improve it dramatically.  We all learn !

Posted by Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate (Realtor / Owner - RE/MAX Access) over 8 years ago

Chris - Your experience is on par with most. The majority learn along the way by default, usually not taking any interest ( no pun intended) with their credit until they are forced to. And yet still some ignore it.

Posted by Stephen Kappre, Helping You Home (KW Hometown) over 8 years ago

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