Credit ratings are just one aspect of the application process for mortgages loans. Even your profits, assets and debts play a role. The "big picture" matters more than any single item, from the perspective of a lender. Having said that, lenders today prefer to see a score of 600 or higher for approval of mortgages. Yet the number definitely isn't set in stone.
When you are planning to use a mortgage loan to purchase a home in California, then at some stage your credit score is likely to come into the picture. This is part of a wider financial assessment process and it will partially decide whether you are eligible for a loan or not.
Definition: Credit scores are three-digit numbers that represent how a person has in the past borrowed money and paid it back. Such figures are determined on the basis of details contained inside credit reports of an individual. There are different kinds of models for scoring. The FICO credit score (usual for mortgage lenders) ranges from 300 to 850. The better the higher.
If in the past you were responsible for your borrowing you should have a strong ranking. It would boost the odds of securing a loan. At the other hand, former credit-problem lenders (such as late payments and delinquencies) appear to have lower ratings.
Such three-digit numbers help mortgage lenders understand the probability of an individual paying back a loan obligation. These are used to determine the possible risk faced by lending money to a particular borrower and to prevent or minimize losses due to the default of the borrower.
There is no standard "cut-off" point used in the mortgage industry for credit ratings. This is one common misunderstanding. The truth is that different lenders have different standards , different business models and different risk appetites. So the credit score required to buy a home in California would depend partly on who you work with.
In general terms — emphasis on the word "generally" — mortgage firms prefer to see a score of 600 or higher for approval of loans. That number, however, is not set in stone. It is just a phenomenon in the industry. So don't be discouraged by dropping below that point. Either way please contact us. We'll gladly review your financial situation to see if you are a good candidate for a home loan from California.
Here too, the type of home loan you use plays a role. For example , home loans from the Federal Housing Administration ( FHA) require a minimum score of 580, if the borrower wishes to take advantage of the 3.5 percent down payment option. Credit score requirements tend to be a bit higher for conventional (non-FHA) mortgage loans, because there is no government insurance.
As described above, when assessing loan applications, the borrowers prefer to look at the big picture. Every lending scenario is different, because it is different for every borrower. So a low credit score may not necessarily be a deal-breaker by itself. Having said that, a higher credit score would usually increase a borrower 's chances of qualifying for a California home loan.
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Sexton Group Real Estate Property Management in Berkeley, California is a boutique real estate company specializing in residential sales as well as property management services for properties throughout the San Francisco Bay Area. We have 2 offices to serve you, one in the heart of Berkeley and the other in the heart of Lafayette, California. The Sexton Group encompasses the essence of Berkeley’s charm and Lafayette’s family-oriented vibe all with a relaxed, down-to-earth nature. We are an amazing group of agents whose wealth of experience spans more than 25 years in the industry. Looking to buy or sell a home in Contra Costa or Alameda County? Contact us today for your free consultation!
