Portsmouth NH Homes Condos Real Estate

If you're thinking about buying real estate in the Portsmouth NH and Maine Seacoast areas, here are some important things to know about credit scores and how that impacts your ability to obtain a home mortgage.

Your credit score is more important today than ever before, and if you've got a good credit score, you want to do everything you can to protect that good score. Your credit score is a good indicator of how likely you are to pay off your debts on time. The more likely your credit history shows this to be, the better the mortgage program will be that you qualify for. The higher your credit score, the better you look to mortgage companies and banks.

Credit scores range from 350 to 850, and the higher your score, the lower the risk you pose. This is how credit scores are categorized:

Excellent Score  --  760 and higher (this number has been increased to closer to 800)

Good Score  --  720 - 760

Average Score --  680 - 720

Reason for Concern --  620 - 680

Reason for Great Concern  --  620 and under

If your credit score falls below 620, you'll have a difficult time finding the loan you want for those Portsmouth homes or condos you're looking at. And for this reason, you really should always speak to a lender BEFORE you being looking at real estate. You need to know how much you qualify for and under what kind of programs. There's nothing worse than going out and looking at real estate, finding a home or condo you love, and then finding out you were looking in the wrong price range and/or don't quailfy for a mortgage because of your credit score. Most professional REALTORS will ask you right up front if you've spoken to a lender yet before they'll start showing you property.

Credit scores are calculated based on a snapshot of your credit profile for a specific period of time. Personal situations are never taken into consideration, so unfortunate situations that we all know happen in life are not part of calculating your credit score. Scores can change dramatically, and if yours isn't so great, you can work on cleaning it up and in a few months have an entirely different score than you have today.

To understand what factors go into comprising credit scores, here are the factors and how they impact scoring:

• 1) Your Payment History - this makes up 35% of your scoring:
  If you pay your bills on time, and in full, this can have the single greatest positive impact on your score. If you miss making a high payment, this will have more severe consequences then if you were to miss a low payment. Late payments over the last two years will have a greater impact than late payments longer ago.

• 2) Your Outstanding Balances - this makes up 30% of your scoring:
  The ratio between your outstanding balance and your available credit limit on revolving debt (credit cards, home equity loans) plays a big role here. You should ideally keep that your open balances at less than 40% of the credit limit on all accounts.

• 3) Your Credit History - this makes up 15% of your scoring:
  Your history of credit shows how much time it's been since any given credit line was established. The longer that account has been open, the better it makes your history look.

• 4) The types of credit you have - this makes up 10% of your scoring:
  If you have a variety of mortgages, car loans, revolving (credit cards), this is looked at more favorably than if you had only credit card debt.

• 5) Your Credit Inquiries - these can make up 10% of your scoring:
  If you have a lot of inquiries, these can cost from 2 to 25 points on your credit score. Only 10 inquiries during any 6 month period is the most that are counted, any inquiries after that don't impact your score. Just so you know, pulling your own credit report will have no impact on your score.

So now that you understand how your credit score is calculated, I'm sure you're wondering how mortgage companies and banks look at your scores. A lender will evaluate your abilitiy to pay your loan based on your score, which shows the risk factor they're incurring by lending to you. That risk will be reflected in the interest rate you'll be given.

The lower your credit score, the higher your interest rate because you're deemed a higher risk than a homebuyer who has a higher credit score. Your credit scores from all three credit bureaus are used in determining your level of risk, and the mortgage companies and bank will use the middle credit score for that risk factor.

If your credit score is low, take heart because you can improve it. It takes work and it's not easy, but it can be, and has been done by many potential homebuyers. You can get some tips and advice from the lender you worked with or you can call a credit repair service. Make sure they're reputable and legitimate - those that are, really can help you repair your credit so you can become a homeowner.

You should periodically review your own credit reports, and if you see any mistakes, contact the credit bureaus to get them corrected.


Once you're ready to jump into the homebuying process and apply for a mortgage, there are things you want to make sure you do and don't do - "Top 10 Do's and Don'ts During the Mortgage Process". There are some important tips here for all homebuyers - check it out.

If you're working to become debt-free, it's not an easy process. I know as I've walked in those very shoes, and I applaud all who work so hard to get to that point. Here are "7 Tips to Becoming Debt-Free" to help you reach that goal.

If you're interested in pursuing homes, condos, real estate in Portsmouth NH and/or the surrounding areas, make sure you speak to an experienced professional REALTOR who'll work hard to help you achieve your real estate goals. Send me an email or give me a call - I'd love to talk with you!

Are you looking to buy real estate in the Seacoast NH or Maine areas?
Give me a call and let's set up a time to talk so I can see how I can help you out!



Related Articles of Interest For Portsmouth NH Homes and Condos Buyers:

• 6 Reasons Why NOW Really is a Great Time to Buy!!
• Buying a Home or Condo in Portsmouth NH and Seacoast Areas
• Portsmouth New Hampshire - A Great Place to Call HOME!
• Coastal Condo Living in Portsmouth NH and Seacoast Areas
  

Ann Cummings, New Hampshire & Maine Broker
RE/MAX Coast to Coast
Portsmouth NH
ann@anncummings.com
888-349-5678 x 3839
Servicing the Coastal Areas of NH & Southern Maine

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