As we wave goodbye to this year and gear up for the next, your dream of buying a home might be dancing in your head. It's a thrilling journey to embark on, and guess what? It's never too soon to start paving the way. A key move in your home-buying prep? Building a rock-solid credit score.
Lenders peek at your credit to check if you're good with money - making payments on time, handling debts, and all that jazz. Plus, your score plays a big part in nailing down your mortgage rate. A little nugget from CNBC: A better credit score can save you a bundle over time because it directly affects your mortgage rate, which then decides how much interest you'll shell out during the loan's life.
Right now, your credit score might feel super important, especially with mortgage rates being a huge deal in how affordable your future home will be.
The median credit score for mortgage-takers in the U.S., according to the Federal Reserve Bank of New York, stands at 770. But hey, don't sweat it if you're not there yet. Business Insider dishes out that you don't need a spotless score to buy a house. Aiming for a 'Good' score (670 to 739) is a fantastic start to qualify for a mortgage. Dreaming of those lowest rates? Then shoot for the 'Very Good' range (740 to 799).
Teaming up with a lender you trust is the best bet to understand how your score fits into your home loan and mortgage rate. Every lender has its playbook, but they all turn to scores like FICO to guide their decisions. And remember, there's no magic number that works for every lender – they look at a mix of things to decide your rates.
A lender will guide you through the whole shebang, from figuring out where your score sits to the nitty-gritty of different loans.
As you set your sights on that dream home in the new year, shining up your credit score is a smart move. It could land you a sweeter mortgage rate when it's go-time. Keen to dive deeper? Reach out to a lender you trust. They'll have all the savvy advice you need to get started.