Home Loan Advice From a Leading Credit Bureau
September 17, 2023
Credit scores and what it takes to be approved for a mortgage are among the most frequently asked-about topics related to FHA home loans.
It’s one thing for you to get advice from a financial pundit or even a lender’s official website. But what do the credit agencies say about how to become a better candidate for home loan approval?
What Experian Says About Improving Your Chances at Home Loan Approval
Experian is one of the “big three” credit reporting agencies. The other two are Equifax and TransUnion. Each credit bureau has its own advice for borrowers, especially home loan applicants.
What does Experian recommend a borrower do to better qualify for an FHA mortgage or any other type of home loan?
It starts with your planning and saving stages. Experian.com advises borrowers to save more for a down payment even if you are well qualified for the lowest FHA down payment option of 3.5%.
Bigger down payment is considered a compensating factor for borrowers with lower FICO scores but even if your scores are high, paying more up front can be an incentive for the lender.
Buying Down the Interest Rate
Experian advice includes considering interest rate buydowns to make your loan more affordable.
From the official site, we learn, “Each discount point typically costs 1% of the loan amount and reduces your interest rate by 0.25% for the life of your loan.”
As Experian notes, this may not sound like a large sum of money until you calculate the savings over a longer period of time. Those planning to buy their property and stay in it for a long time may be well-served by the purchase of discount points.
Continue to Monitor Your Credit
This advice includes not applying for new credit while you are working on getting ready for your mortgage. You want to avoid major negative changes to your payment habits, your debt ratio, and the amount of credit you carry at application time.
Adding more debt is a bad idea during home loan planning and saving time. Reducing your current debt is a good idea.
Consider an FHA Adjustable Rate Mortgage (ARM)
This is advice we have given ourselves in this space, and it’s clear that when the credit agencies are recommending such a course of action it’s at least worth considering.
You may not choose to apply for an FHA ARM loan in the end, but isn’t it worth it to consider how much you might save up front compared to a fixed-rate equivalent? There’s no obligation to compare those costs.
------------------------------
RELATED VIDEOS:
Get Your Questions Ready for Your Loan Officer
The Last Part of the Transaction Is the Mortgage Closing
Know What You Can Borrow With Prequalification
It’s one thing for you to get advice from a financial pundit or even a lender’s official website. But what do the credit agencies say about how to become a better candidate for home loan approval?
What Experian Says About Improving Your Chances at Home Loan Approval
Experian is one of the “big three” credit reporting agencies. The other two are Equifax and TransUnion. Each credit bureau has its own advice for borrowers, especially home loan applicants.
What does Experian recommend a borrower do to better qualify for an FHA mortgage or any other type of home loan?
It starts with your planning and saving stages. Experian.com advises borrowers to save more for a down payment even if you are well qualified for the lowest FHA down payment option of 3.5%.
Bigger down payment is considered a compensating factor for borrowers with lower FICO scores but even if your scores are high, paying more up front can be an incentive for the lender.
Buying Down the Interest Rate
Experian advice includes considering interest rate buydowns to make your loan more affordable.
From the official site, we learn, “Each discount point typically costs 1% of the loan amount and reduces your interest rate by 0.25% for the life of your loan.”
As Experian notes, this may not sound like a large sum of money until you calculate the savings over a longer period of time. Those planning to buy their property and stay in it for a long time may be well-served by the purchase of discount points.
Continue to Monitor Your Credit
This advice includes not applying for new credit while you are working on getting ready for your mortgage. You want to avoid major negative changes to your payment habits, your debt ratio, and the amount of credit you carry at application time.
Adding more debt is a bad idea during home loan planning and saving time. Reducing your current debt is a good idea.
Consider an FHA Adjustable Rate Mortgage (ARM)
This is advice we have given ourselves in this space, and it’s clear that when the credit agencies are recommending such a course of action it’s at least worth considering.
You may not choose to apply for an FHA ARM loan in the end, but isn’t it worth it to consider how much you might save up front compared to a fixed-rate equivalent? There’s no obligation to compare those costs.
------------------------------
RELATED VIDEOS:
Get Your Questions Ready for Your Loan Officer
The Last Part of the Transaction Is the Mortgage Closing
Know What You Can Borrow With Prequalification
Do you know what's on your credit report?
Learn what your score means.
