If you are bookending 2023 with the thought of becoming a homeowner in 2024, you would not be alone. However, buying in The Main Line is very competitive and getting financing lined up, has many potential buyers paralyzed. Here are some ways to organize your borrowing prospects. It is never too early to lay the groundwork for your homeownership journey and one of the pivotal aspects to consider is the establishment of a robust credit score. Buying in 2024? Time to Optimize your Credit Score
Lenders scrutinize your credit history to determine whether you will be responsible for a debt. This, in turn, plays a significant role in determining your mortgage rate, as explained by CNBC:
“When it comes to mortgages, a higher credit score can save you thousands of dollars in the long run. This is because your credit score directly impacts your mortgage rate, which determines the amount of interest you’ll pay over the life of the loan.”
Since mortgage rates are a critical factor in affordability, and with rates on the rise, your credit score becomes even more important to your homebuying plans.
According to the Federal Reserve Bank of New York, the median credit score for those securing a mortgage in the U.S. is 770. However, you do not need to have perfect credit to secure financing. As highlighted by Business Insider, aiming for a credit score in the ‘Good’ range (670 to 739) is an excellent starting point. For those aspiring to secure the lowest rates, targeting the ‘Very Good’ range (740 to 799) is advisable.
To get an accurate assessment of how your credit score will influence your borrowing power and mortgage rate, you really need to partner with a local lender. If after you consult with a lender and get preapproved, but are looking to improve your credit to get more favorable terms, where are some tips from Experian.
Payment History: Timely payments positively impact your score, settle late charges promptly.
Debt Amount: Minimize the amount of available credit you’re using.
Credit Applications: Avoid unnecessary credit applications, since each inquiry can result in a temporary drop in your score.
Having a reputable lender is invaluable in homebuying. Now only are they able to help assess your credit score and offer more tips, but they are also experts at finding loan terms and types that best suit your needs. If you are buying n the coming year, elevating your credit score is a big part of improving your prospect of securing a favorable mortgage rate. If you would like more information on homebuying on The Main Line PA, contact Kimmy Rolph Real Estate.
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