We all know that credit scores are important in our everyday lives from potential job to insurance to, of course, borrowing. Unless you have just emerged from the jumgles of Borneo (wherever the heck that is), this has become common knowledge.
But how does your lender view these scores, and what is the range for taking out a great loan with excellent interest?
The low end of the credit score range is about 500. If your score is hovering below 580, your dog can indeed probably get a loan easier than you can with better terms. If you are lucky, he will allow you to live out back in a cushy doghouse. I'm not too sure my dogs would give me that choice!
Next, lenders view the range between 580 and 620 as a challenge for lending, and your rates will be higher, but you may be able to get out of your cushy doghouse and into your own home. Maybe.
Between 620 and 680, lenders consider these scores to be low, but you and Fido will probably be able to obtain a loan, particularly if it is government backed, such as the Rural Development Loan or FHA. (se my previous blog on these types of loans)
And finally, above 680 you will be eligible for conventional loans at good rates, especially if your scores are above 720. You will need 20% down payment. Conventional loans are the easiest to close.
All that said, my attorney jokingly said recently, "600 may become the new 800," meaning that there are so many people with damaged credit that if the banks are ever going to lend money, there must be some consideration for the fact that recent credit hits should be offset by 20 or 30 years of perfect credit. Will this happen? It remains to be seen. Currently, the lenders are too shell shocked for leniency, but in the next couple of years these credit lapses will have to be considered.
So if you are ready to tap into the gold that is real estate in Central Oregon, whether homes, investments or ranches, give me a call, and I will refer you to excellent mortgage brokers who will explain all of this in depth with you and diagnose what is best for you in your situation.