Credit scores. Debt-to-income ratio. Pre-qualifications. There’s SO much about getting a mortgage that can be scary, especially for first-time homebuyers.
But getting a mortgage doesn’t have to be scary!
In this week’s episode of Let’s Get Real with Real Estate, Suzie Koehn and I sat down with Angie Lehto from First Interstate Bank to discuss the things about applying for a mortgage that scare people off – and why you don’t have to be scared of those things.
As Angie discussed in the video above, one of the most important things you can do is actually get your credit report and see what’s on it.
If you have bad credit, it’s okay! You need to know where you’re at credit-wise, that way you know what needs to be done to raise your score. You can get a yearly free credit report at Annual Credit Report that pulls all your credit information from all three credit bureaus – Equifax, TransUnion, and Experian.
But as Angie also pointed out, there’s a huge misconception that you have to have a perfect credit score to qualify for a mortgage. That’s just not the case!
You can have some missed payments and other negative marks on your credit report and still be able to qualify for a mortgage. What’s more, you don’t have to have an excellent credit score to qualify for a mortgage, either.
For example, to qualify for an FHA loan, a FICO credit score of 580 or higher is needed, and with that score, you’ll have a 3.5 percent minimum down payment. If your score is lower than 580, you might still qualify, though a 10 percent down payment is required.
The point is that checking your credit, figuring out your debt-to-income ratio, finding a mortgage program for which you qualify, and all the other aspects of getting a mortgage aren’t as scary as you might think. That’s especially true if you work with a local lender who you can talk to face-to-face!
For more tips and advice about mortgages, be sure to watch the complete video above!