If you’re seeking to purchase a new home, you’re probably very excited. After all, ownership of a home is a source of pride and often the biggest purchase you’ll make in your life.
However, before beginning the home buying process, you’ll want to make sure that you are financially prepared to do so. This preparation includes having a down payment available and a clean credit report.
How Much Should I Have to Put Towards a Down Payment?
The amount that you should have to put towards a down payment on a home will vary. The common thought is 20%, although, in reality, there are a variety of loans available that don’t require nearly as much.
Keep in mind that the money you have available to put down will increase the amount of equity that you’ll have in your home once it’s purchased. It will also lower the amount of your monthly mortgage payment and reduce the amount of interest that you will pay over time.
Increasing the size of your down payment allows for:
- More alternatives for mortgage loan solutions
- Potential interest reduction
- Greater equity in the home
- Decreased monthly payments
However, in some cases, it may not be possible to put down a sizable down payment. In this case, you’ll want to maximize your credit score as much as possible.
How Does My Credit Score Impact Florida Mortgages?
Prior to applying for a mortgage, you’ll want to ensure that your credit report and credit score are clean. To do this, first pull a credit report from each of the three major credit bureaus, including Transunion, Equifax, and Experian.
You can do this for free through Annualcreditreport.com. Next, review all of the activity reported on your credit report to ensure its accuracy.
If you find inaccuracies in your report, such as payments that were reported as being late, items in collections, or other items, you’ll want to dispute them as soon as possible. Disputes that are reported must typically undergo a process that lasts at least two months before they are corrected on your credit report.
Now is also the time to review your credit cards and any other revolving debts to improve your credit score.
If you have accounts that have balances that are near the maximum, try to pay them down to only 40% of the overall allotted credit. In addition, make sure to keep making all debt payments on time. This strategy can provide a significant boost to your credit score.
Your credit score is used to determine the size of the loan that you will qualify for as well as its interest rate. Interest can have a significant impact on the size of your monthly mortgage payment. You want to minimize the interest that you pay as much as possible when applying for Florida home loans.
If your credit score is low, you may not be able to qualify for a mortgage loan, or the one that you obtain may have a high interest rate. To get the most out of your home purchase, try to maximize your credit score and eliminate any issues prior to applying for a loan.
A mortgage lender in Florida can help you to examine your credit report and suggest options to improve your score prior to beginning the full loan application process.
How Can a Mortgage Lender in Florida Help?
A mortgage lender is familiar with the mortgage loan application process and will know the types of loans that a borrower may qualify for, as well as what they will need in order to do so.
The mortgage lender can suggest the amount required for a down payment, provide various mortgage payment scenarios, and suggest remedial action for any negative items that appear on the credit report.
Reaching out to a mortgage lender in Florida for advice before beginning the loan application process helps ensure a smoother home buying process. Doing so can assist you in qualifying for a low-interest loan that suits your needs.
Disclaimer: The opinions expressed above are meant for illustrative purposes only. For specific questions about mortgages or your lending needs, please contact Arco Financial. www.arcofinancial.com. Some restrictions apply. NMLS # 2149692