CREDIT SCORES
Preparation for buying a home in Montgomery County, Maryland

Your financial life is reflected by your credit report and your credit worthiness is reflected by your credit score. If you've paid all of your credit card, store accounts, furniture accounts, automobile payments and mortgage payments on time for a period of approximately two years, you should have a very respectable credit score. Companies such as Fair Isaac compile your credit history as reported to the credit reporting agencies, Equifax, Eperian and TransUnion and through the use of unique and secret algorithms, produce a score that reflects your credit worthiness. Length of credit history, amount of credit, timeliness of payments, percentage of limits charged are all examples of factors used in determining your credit score.

For purposes of purchasing real estate in Maryland, the higher your credit score, between 400-900, the lower the interest rate your lender will offer. With the exception of FHA or VA loans, few borrowers without significant down payments will be able to obtain a conventional loan with credit scores of less than 630. Rates will be higher for borrowers with credit scores of less than 720. On the other hand, borrowers with credit scores over 770 will be approved quickly with little attention paid to LTV.

Almost all credit providers; banks, stores, finance companies, mortgage lenders and credit card vendors extend credit to applicants based on the credit score. So, it is in your interest to obtain a copy of your credit report as soon as you make the decision to buy a home in Maryland. Lenders will pull your credit report prior to giving you a rate quote. So, it's best, especially if you have had credit problems at any time in the past to review your credit report for accuracy prior to making a mortgage application.

In Maryland, home buyers will have to have a preliminary lenders letter in order to make an offer on a house. So, be prepared with a good credit report prior to making home purchasing decision. Your Homefinders.com buyers agent will assist you in obtaining a preliminary lender's letter and you'll be ready to find that special home.

Happy home hunting.

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