The housing market in Florida is a fast-moving place filled with properties at all price ranges. If you’re thinking of homeownership, though, one of the first things you’ll need to do to grab one of those hot properties on the market is prequalify for a mortgage, and often that means having your finances scrutinized. There are certain advantages of being a first time home buyer. From what’s in your bank account to your entire credit history, a lender will dig deep to help mitigate the risk of making a bad loan. One factor in the process is certainly credit score.
The Necessary Credit Score to Buy a House in Florida
Among other things, your credit score determines whether you’re even eligible for a loan to buy a home. If you’re a little unfamiliar with the concept, a credit score helps a lender see how likely you are to pay your loan back on time. There are many different factors that go into that score including your overall bill-paying history, your current debts, the number of loans you have right now (including your credit card accounts), how long you’ve had that debt, and how much of the credit available to you that you’re using overall. Additionally, if you’ve ever had a debt sent to collections, a foreclosure, or even a bankruptcy, that will appear in your credit score.
The minimum score to buy a house in Florida depends a bit on the type of mortgage you want. If your goal is to obtain a conventional mortgage, the minimum score needed is 620. If, though, you want to go with a different kind of loan program – like an FHA loan or a VA loan – you only need a credit score of 580 to get access to the funding required to buy your new home.
Good Credit Scores May Actually Lower Your Payments
In addition to helping you actually obtain the loan, your credit score can also offer you better payments. Just one of the advantages of being a first time home buyer in Florida. The higher your overall score, the better the APR on your loan might be. As a result, you could save thousands over the life of your loan in interest repayments. So, while you can qualify with a lower credit score, it certainly pays off to pay attention to your credit score and strengthen it before you take out a loan. Fortunately, there are a few things you can do to enhance your credit score before you get a loan. First, get a copy of your credit report. Lenders sometimes make mistakes, and you can check your history for problematic errors. You should also pay off any credit card balances you currently have. It can take lenders up to 60 days to update your balance, though, so you’ll want to do this as soon as you start shopping for a home. Additionally, pay your bills on time. A single late payment really decreases your credit score, triggering a host of problems if you’re shopping for a mortgage.
Credit Score May Not Be The Only Hurdle
While many people are focused on repairing their credit so they can buy a home, it’s important to note that just making that minimum credit score to buy a house in Florida isn’t the only financial preparation you’ll need to make. Instead, you’ll also need to think about gathering a down payment and closing costs for the loan. Fortunately, there are several advantages of being a first time home buyer in Florida in this department. There are a number of first time home buyer options available to help you get the down payment money you need. If you’re looking at conventional financing, most lenders want to see a down payment of 20%, but the Florida Housing Finance Corp, sometimes called Florida Housing, is a great way to get the resources you need to make home buying more affordable. They offer both down payment and closing cost assistance with that loan, and you can even take place in the Mortgage Certificate Program, which is a tax credit that can help generate income to ensure you can meet your household expenses.
Among their most popular products is the Florida HFA Preferred Conventional Loan. This 30-year-fixed-rate mortgage helps buyers deal with the private mortgage insurance that often comes with properties on which you’ve made a fairly low downpayment. Typically, if you qualify for this loan, you only need private mortgage insurance that covers 18% of the value of the loan. That helps to keep monthly mortgage payments relatively low. They also offer another loan that provides you with a grant for a small – three percent – down payment and the closing costs of the loan. The grant need never be repaid.
There’s never been a better time to buy a house in Florida, and with helpful programs like these, it’s more possible than ever for most families. Contact us today if you are looking into buying or building a home!