COMMON QUESTIONS
WHY IS CREDIT RATING IMPORTANT?
Credit scoring or rating is the process whereby a lender determines how much of a risk you present.
Several factors are used to tabulate your score, including:
• Promptness or lateness of payment
• How much credit you carry
• How many times credit reports have been requested, and various other factors
To maximize your home buying power in the future, you should be concerned about your credit score. Some lenders may use less strict standards with excellent credit ratings.
MISTAKES TO AVOID BEFORE APPLYING
• Applying for additional loans or credit just before applying for a home loan
• Purchasing large ticket items
• Authorizing credit reports on your credit
• Using up all your cash reserves to pay off your debt
• Switching or quitting jobs just before, after, or during the application process
SHOULD I LOCK-IN MY INTEREST RATE OR“ FLOAT”?
Interest rates on mortgages fluctuate daily according to the marketplace. At application, buyers have two choices: lock in the rate that is quoted, or“ float” the interest rate, meaning the rate continues to move with the market. The benefit of a lock-in is you have peace of mind knowing what your mortgage payment will be from the time you are approved. With floating, you may be able to get a lower rate by waiting for rates to go down. Either decision should be based on your comfort level after you’ ve carefully considered the money markets which affect interest rates. Most lenders will not allow you to lock-in until you have a property under contract. The best advice is to know the market trends and listen to advice from a lender you trust.
8 | THE BUYER’ S EDGE | A GUIDE TO PURCHASING A HOME