4 Tips To Help You Qualify For A Mortgage Loan

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The median Credit score from successful mortgage applicants in the past year 759or “very good” on the FICO scale. Only 10% of mortgage borrowers had credit ratings below 647, according to the Federal Reserve.

And while it’s not the norm, borrowers with scores as low as 620 are approved for new mortgages despite the current economic downturn. However, when applying for a mortgage as a bank, it is still important to have a healthy credit score tighten their lending standards.

To increase your chances of getting a loan, pay attention to where your credit is – and don’t give up hope if it is low.

“There are many misconceptions that your credit must be perfect in order to qualify for a mortgage,” said Montell Watson, director of National Retail Mortgage Lender Movement Mortgage, tells CNBC selection.

Watson says there are opportunities for many different credit profiles to be approved for a home loan today, but he wants to remind future buyers that the lower your score, the harder it is to qualify. In most cases, you also add the cost of higher interest rates.

Since Watson leads many of the company’s homebuyer education initiatives, we asked him what the best ways to top up borrowers’ less-than-outstanding loans before applying for their first mortgage.

Know what your credit rating is saying

As you prepare to become a future homeowner, the first step in preparing your loan is knowing what your loan looks like.

Start with a visit AnnualCreditReport.com for your free weekly credit report from each of the three major credit bureaus: Experian, Equifax and TransUnion.

The information may vary between reports, but you can assume that you have your personal information (name, birthday, social security number), your current and historical credit accounts (credit cards, mortgages, loans) from the last seven to ten years, and inquiries as of when Find your credit has been pulled and all public records such as bankruptcies and foreclosures.

4 tips to prepare your credit

Bottom line

If you have fair or average credit, don’t let that stop you from applying for a home loan. With an improved credit score, you can increase your chances of getting started knowing that there are professionals such as loan officers to assist you.

Do not miss: What Credit Score Is Required To Buy A Home?

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Editor’s note: The opinions, analyzes, ratings or recommendations expressed in this article come exclusively from the Select editorial team and have not been reviewed, approved or otherwise endorsed by third parties.

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