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    New Year's Homebuying: Boosting Your Credit Score for Success

    Buying a home might be on your mind as the new year approaches. It's an exciting goal, and it's never too early to start...

    • Juan Murray
    • December 26th, 2023
    • 3 min read

    Buying a home might be on your mind as the new year approaches. It's an exciting goal, and it's never too early to start laying the groundwork. One crucial step to prepare for homeownership is building a solid credit score.

    Lenders review your credit to assess your ability to make timely payments, pay back debts, and more. It's also a factor that helps determine your mortgage rate. An article from CNBC explains:

     "When it comes to mortgages, a higher credit score can save you thousands of dollars in the long run. This is because your credit score directly impacts your mortgage rate, which determines the amount of interest you'll pay over the life of the loan." 

    This means your credit score may feel even more important to your homebuying plans since mortgage rates are a critical factor in affordability, especially today.

    According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is 770. But that doesn't mean your credit score has to be perfect. An article from Business Insider explains generally how your FICO score range can make an impact:

     ". . . you don't need a perfect credit score to buy a house. . . . Aiming to get your credit score in the 'Good' range (670 to 739) would be a great start towards qualifying for a mortgage. But to qualify for the lowest rates, try to get your score within the 'Very Good' range (740 to 799)." 

    Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan and the mortgage rate. As FICO says:

     "While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its strategy, including the level of risk it finds acceptable. There is no single "cutoff score" used by all lenders, and there are many additional factors that lenders may use to determine your actual interest rates." 

    If you're looking for ways to improve your score, Experian highlights some things you may want to focus on:

    • Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
    • Your Debt Amount (relative to your credit limits): Regarding your available credit amount, the less you use, the better. Focus on keeping this number as low as possible.
    • Credit Applications: Don't apply for additional credit if you want to buy something. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.

    A lender will help you navigate the process from start to finish, from assessing which range your score falls to telling you more about the specifics for each loan type.

    Bottom Line

    As you set your sights on buying a home in the upcoming year, boosting your credit score could help you get a better mortgage rate when the time comes. If you want to learn more, connect with a trusted lender.

    Need Help Getting Started? 

    We can connect you with the best resources!

    Let's Talk

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    About the author

    Juan Murray

    (617) 721-0961
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    Juan got his start in the residential real estate market in 1994 and has never looked back. His mission is to provide excellence to his clients, and he is always looking for ways to improve the real estate experience for his clients and colleagues in the industry. Early in his real estate career, he worked as the Housing Rehabilitation Director for a national non-profit organization, Neighborhood Assistance Corporation of America (NACA). His goal was to gain more knowledge of the construction and renovation of existing homes in conjunction with working with 1st-time buyers. He effectively managed over 25 residential construction project managers on the East & West coasts while implementing procedures to improve communication between contractors, property owners, and banking representatives. He also developed resources, designed processes, and organized all aspects of real estate property acquisition and renovation. Juan completed a home inspector licensing course on his way to becoming a licensed home inspector. But after completing 30 inspections as an apprentice observer, after crawling under numerous porches and “crawl spaces,” he decided it wasn’t his cup of tea. Juan has always had a sharp eye for market trends and an innate understanding of what his clients need. That’s why, as a top real estate agent in Boston, he is constantly ahead of the curve, anticipating changes in the market and helping his clients manage their real estate goals. His keen intellect, quick wit, and tireless work ethic make him an invaluable partner for anyone looking to buy or sell property in the Boston area (or via his referral partners worldwide). Although Real Estate is a large part of his life, it is not the only part. He loves hanging out with family and friends, being in the kitchen, enjoying great food, anything Apple or Cole Haan, gadgets, great cigars, F1, motorcycles, photography, and traveling (to name a few). He lives with integrity and tries not to take life too seriously.

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    Juan Real Estate Group

    Juan Real Estate Group

    769 Centre St, Suite 209, Jamaica Plain, MA 02130

    769 Centre St, Suite 209, Jamaica Plain, MA 02130

    Call Us:

    (978) 581.0801

    Message Us:

    [email protected]

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