If you’re starting to think seriously about buying a new home, then it’s time to begin considering affordable home loans in Boca Raton. An affordable loan is one that works with your income and lifestyle, with a reasonable deposit that will get you into your first home. As much as an affordable home loan can be a blessing, the process can also be stressful and confusing if you aren’t prepared.
At NHL lending, we’ve found that sometimes buyers will overlook some important points, such as their credit score. To put it simply, if you want a favorable home loan (or even to qualify for a home loan), you’re going to need a good credit score.
Let’s take a look at why your credit rating is so important when you’re shopping around for Boca Raton home loans.
It’s All About Trust
When you’re applying for home loans in Boca Raton, the lenders are taking a certain level of risk on the agreement. An underwriter needs to be confident that your credit history indicates your willingness and ability to pay for a loan.
If you have a bad credit rating, then the risk to the lender is increased. They have to look at your record and consider whether you are likely to make late payments in the future or even default entirely. Of course, even if you’ve had a bad mark on your credit history, it doesn’t mean you’re going to repeat the same mistakes again, however, those marks will lower your score and it means that lenders will want to see a higher interest rate, large deposit, or other guarantees that make the deal less risky from their perspective.
There are three basic scenarios that may occur if you apply for Boca Raton home loans while you have a poor credit rating.
- Your interest rate will be higher than a lender’s APR.
- Your credit limit could be reduced, meaning that you’ll need a larger deposit to get the home you want.
- You could be outright denied credit for a home loan.
At NHL Lending, we know that finances don’t always go smoothly. Sometimes, just a few missed payments or an ill-advised loan in your past could lead to a poor credit score. We’re here to help you get a loan that works with your situation, and we can also provide some advice on repairing your credit score so that you can get the most competitive loan rates.
Simple Steps to Improve Your Credit Score
The simplest and most straightforward way to improve your credit rating is to commit to making your payments on time, every time. However, if you have more than a few blemishes on your record, then this won’t be enough to bring your score back up. In addition to paying on time, you should also aim to reduce your total outstanding debt. This can be done by reducing your current expenses and making voluntary payments on your credit cards or other loans.
Reducing credit card debt is critical, and you’ll ideally want to utilize less than 50% of the credit that is available to you.
Most importantly, you’ll need to cease applying for credit in the year before beginning the home loan process If you haven’t planned this far ahead, then at least have a period of six months without applying for other credit. New applications (successful or not) can impact your credit score.
Although reducing your debt and improving your credit can mean that you’ll make some sacrifices, it is definitely worth it in the long run. By reducing expenses and luxury purchases now, you could boost your score and be the home of your dreams, faster than you think.
Get Expert Boca Raton Home Loans Advice at NHL
If you’re ready to start applying for the best home loan rates in Boca Raton, or if you simply want to get more information before buying a home, then it’s time to talk to the team at NHL. We’ve helped thousands of families move into their first homes, move-up homes, and even jumbo homes, and we can help you to start planning, no matter what your current financial situation is.
Call today to speak with a mortgage expert.