We’ve all made some mistakes in the past with credit. Missing a payment here, being late on a payment there. Thanks to the Federal Housing Administration (FHA), you do not need to have perfect credit to buy a home. Did you know that half of all FHA home buyers today have scores below 680?
The FHA mortgage program was launched in 1934 to help boost and stabilize the American housing market. In plain English, it means FHA makes it easier for people to qualify for a home loan compared to a conventional loan. A few advantages of a FHA loan are:
Thanks to some of these benefits and more, FHA loans will play a major role in the U.S. Housing Market. If you have a low score, be upfront about it and ask your mortgage loan originator. Some lenders will allow a score as low as 580, yet some have additional “investor overlays” requiring a credit score of 620 or higher. But are you curious on how your credit score is “created”?
Credit scores are a way to measure the risk of the applicant’s willingness to make timely payments on their loan. They are measured by risk. Consumers who pay their debts on time usually have higher credit scores than others. It can also be changed regarding how much you owe based on your credit card limits as well as any collections in your credit history. To this date, the FICO credit score is the most common system used by mortgage lenders, scores ranging from 300-850. So when it comes to mortgage approvals, lenders use the scores published by the three well-known, major credit bureaus – Equifax, Experian and TransUnion.
To learn more about your credit and FHA loans rates in NJ, call us at (973) 577-7008.