If you recently got married and are ready to buy a house, the two main questions you may have are how much money you will need to put down on it and what type of credit score will you need. These are both important topics to look into before you shop for a new house, and here are the details you should know that may help answer the questions you have about this.
Down payment needed for a home
While it is possible to buy a house without putting a lot of money down, it is better to try to put as much down as you possibly can. Your down payment amount will determine how much equity you have in your home, and the amount of equity often dictates whether or not you must pay private mortgage insurance (PMI). PMI is an extra expense that can cost around 0.5% to 1% of the purchase price of a home. If you can put down at least 20% on the home, you can avoid paying this.
Avoiding this extra expense can be beneficial for your budget; however, it can be very difficult for a young couple to come up with this much money. The good news is that you can still get a loan without offering a 20% down payment. In fact, there are certain loan programs that may allow you to buy a home with a down payment of only 3%.
Credit score needed to get approved for a mortgage
The credit score you have will not only play a role in your ability to get a loan, but it will also determine what interest rate you get on your loan. People with excellent credit scores can qualify for the lowest interest rates, while people with low credit scores will pay higher interest rates.
If your current credit score is at least 660 or higher, you should be able to qualify for a home loan with a decent interest rate. If your score is lower than 620, waiting to get a loan might be a better route to take. While there is a chance you might find a lender that will approve your loan with a credit score that is this low, you will pay a really high interest rate on the loan.
If you have a high enough credit score and some money to put down on a house, you should have no problem finding a mortgage lender that will approve a home loan for you. To learn more about this, contact a mortgage company in your city.Share