What To Know About Credit Scores Before Buying a Home

If you want to buy a home, you should know your credit score is a critical piece of the puzzle when it comes to qualifying for a mortgage. Lenders review your credit to see if you typically make payments on time, pay back debts, and more. Your credit score can also help determine your mortgage rate. An article from US Bank explains:

“A credit score isn’t the only deciding factor on your mortgage application, but it’s a significant one. So, when you’re house shopping, it’s important to know where your credit stands and how to use it to get the best mortgage rate possible.”

That means your credit score may feel even more important to your homebuying plans right now since mortgage rates are a key factor in affordability. According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is 770. But that doesn’t mean your credit score has to be perfect. The same article from US Bank explains:

“Your credit score (commonly called a FICO Score) can range from 300 at the low end to 850 at the high end. A score of 740 or above is generally considered very good, but you don’t need that score or above to buy a home.”

Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan and the mortgage rate you’re able to get. As FICO says:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.”

If you’re looking for ways to improve your score, Experian highlights some things you may want to focus on:

• Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
• Your Debt Amount (relative to your credit limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible.
• Credit Applications: If you’re looking to buy something, don’t apply for additional credit. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.

Bottom Line

Finding ways to make your credit score better could help you get a lower mortgage rate. If you want to learn more, talk to a trusted lender.

Buy for less.
Sell for more.

Don't get stuck with the wrong agent.

As a Relocation Specialist with Realty Connect, I belong to an nationwide network of over 25,000 top-rated agents serving every zip code in all 50 states. Instead of helping you buy or sell a home personally, I help match my clients with up to 3 great agents who specialize in your market. The best part? This is a 100% FREE service, so there is no cost, pressure or obligation! With my experience and connections, I can quickly help you find the perfect agent better than what most people are able to do on their own.

The Spring Market Is a Sweet Spot if You’re Looking To Sell [INFOGRAPHIC]

Some Highlights

• Wondering if now’s a good time to sell your house? Based on how many homes are on the market, there are two big reasons why this spring is looking so good for sellers.
• Thanks to an uptick in inventory over last year, you’ve got more options for your next home. But there are still fewer homes for sale than there’d normally be, meaning your house should stand out and get a lot of attention from buyers.
• If you want to sell your house, this spring is the sweet spot. When you’re ready, let’s chat to get the ball rolling.

The Surprising Trend in the Number of Homes Coming onto the Market

If you're thinking about moving, it's important to know what's happening in the housing market. Here's an update on the supply of homes currently for sale. Whether you're buying or selling, the number of homes in your area is something you should pay attention to.

In the housing market, there are regular patterns that happen every year, called seasonality. Spring is the peak homebuying season and also when the most homes are typically listed for sale (homes coming onto the market are known in the industry as new listings). In the second half of each year, the number of new listings typically decreases as the pace of sales slows down.

The graph below uses data from Realtor.com to provide a visual of this seasonality. It shows how this year (the black line) is breaking from the norm (see graph below):

Looking at this graph, three things become clear:

• 2017-2019 (the blue and gray lines) follow the same general pattern. These years were very typical in the housing market and their lines on the graph show normal, seasonal trends.
• Starting in 2020, the data broke from the normal trend. The big drop down in 2020 (the orange line) signals when the pandemic hit and many sellers paused their plans to move. 2021 (the green line) and 2022 (the red line) follow the normal trend a bit more, but still are abnormal in their own ways.
• This year (the black line) is truly unique. The steep drop off in new listings that usually occurs this time of year hasn’t happened. If 2023 followed the norm, the line representing this year would look more like the dotted black line. Instead, what’s happening is the number of new listings is stabilizing. And, there are even more new listings coming to the market this year compared to the same time last year.

• For buyers, new listings stabilizing is a positive sign. It means you have a more steady stream of options coming onto the market and more choices for your next home than you would have at the same time last year. This opens up possibilities and allows you to explore a variety of homes that suit your needs.
• For sellers, while new listings are breaking seasonal norms, inventory is still well below where it was before the pandemic. If you look again at the graph, you’ll see the black line for this year is still lower than normal, meaning inventory isn’t going up dramatically and prices aren’t heading for a crash. And with less competition from other sellers than you’d see in a more typical year, your house has a better chance to be in the spotlight and attract eager buyers.

Bottom Line

Whether you're on the hunt for your next home or thinking of selling, now might just be the perfect time to make your move. If you have questions or concerns about the availability of homes in our local area, let’s connect.

Buy for less.
Sell for more.

Don't get stuck with the wrong agent.

As a Relocation Specialist with Realty Connect, I belong to an nationwide network of over 25,000 top-rated agents serving every zip code in all 50 states. Instead of helping you buy or sell a home personally, I help match my clients with up to 3 great agents who specialize in your market. The best part? This is a 100% FREE service, so there is no cost, pressure or obligation! With my experience and connections, I can quickly help you find the perfect agent better than what most people are able to do on their own.

What You Need To Know About Down Payments [INFOGRAPHIC]

Some Highlights

• If you want to buy a home, you may not need as much for your down payment as you think.
• There are various loan options for qualified buyers with down payments as low as 3.5% or even no down payment requirement. There are also thousands of programs available to help homebuyers with their down payments.
• With the right resources, your down payment may be more within reach than you realize. To learn more about your options, let’s connect.