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Sounds like you’re on the right track with your limited debt, congratulations on that. You don’t mention what size down payment you plan to make, and that makes a large difference in the pricing adjustments based on your credit scores. Those costs can addd up to 3% to the cost of the loan for lower down payments and credit scores (below 740), but don’t apply to 15 year mortgages if you go that route. The most lenient program credit score wise is FHA, you’ll get a great rate there with scores of 640 (perhaps a touch lower)but have to pay substantial costs to HUD. As far as co-borrowers go, lenders use the LOWER of the two borrowers' middle credit score, not an average. If you have a 700 score and your husband’s is 620, if both of you are on the loan, you’re considered 620 borrowers. Hope that answers your questions, if you have more, let me know!
about 1 year ago
Leah
said:
thanks for your help. Currently we can put down around 15%, won’t be quite 20% but not less then 15%. Would actually putting down 20% be more helpful for a credit score under 740?
about 1 year ago
Ted Rood
said:
@Leah Mainguy Yes, 20% is somewhat of a magic number. It gives you enough equity to avoid PMI. If you go with a term longer than 15 years, you’ll have credit score pricing adjustments based on the down payment % and score. Ironically, the score hit can be higher if you put down 20% compared with 15-20% down, but still beats paying PMI in most cases. If you are doing an FHA loan, none of the above applies, but if you have close to 20% down, probably no need to go FHA.
I am a first time home buyer and I am trying to figure out whether to do a 15 or 30 yr mortgage. How do I know what kind of credit score will get me a good rate? I have decent credit score and no outstanding debts, two credit cards with less than 30% of credit limit on both. However my husband’s credit score is a lot lower (no debts just limited credit history). Applying for loan together how do they average credit scores? What’s a credit score that will get me a good interest rate?
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