Know the score

Kathy Henne

January 17, 2014

You hear it everywhere: nonconforming loans, FICO scores, default risks, rising interest rates. Sounds like a lot of gloom and doom, doesn’t it? While lenders are more conservative now, the truth is that it’s still an excellent time to purchase a home. It’s also time to educate yourself about the economics behind securing a home loan.

The rate you are offered on a mortgage is largely based on your FICO score. What is FICO? It simply stands for Fair Issac & Company, who developed our modern credit scoring models. The highest possible “score” is 850, and you’ll need a rating of 620 or above to be considered for the best interest rates.

Higher income does not necessarily generate a higher score. Your payment history does have significant impact, however. This means paying your bills on time or even before they’re due. If you have a higher credit score, you’re sitting in a great position to receive the absolute best mortgage rates and terms.

Be cautious out there when you’re searching for a mortgage loan. There are so many types of loans available, you’ll find some are a good fit for you and some are downright unwise. Keep in mind that if it sounds too good to be true, it probably isn’t.

It’s always a good idea to work with a great local lender. Take time to sit down with them in their office and let them explain the pros and cons of each different loan program that they offer. They are always called upon to support our local community and they deserve our loyalty. Also, if a problem arises during your loan process you always know where to find them. Don’t get lured into a big mess by one of those internet loan companies. They seem to disappear right before closing and you’ve lost money on loan fees and inspection fees and worst of all you’ve lost your Dream Home.

Kathy Henne is a RE/MAX realtor, she can be reached at (937) 778-3961 or visit www.KathyHenneTeam.com for more information.