Mortgages Can Be Complicated, but We Have You Covered.

Buying a house is a significant financial decision, and your credit score plays a crucial role in determining your eligibility and affordability. This guide will help you understand how your credit score impacts your buying power, the minimum credit scores required for various loan types, and tips to improve your credit score for a smoother home-buying process. What Role Your Credit Score Plays in the Homebuying Process Your credit score is one of the four c’s of the mortgage qualification process alongside collateral, capacity, and capital. From your pre-approval to the closing table, your credit score plays a crucial role in your mortgage qualification and the overall affordability of your home purchase. Lower Interest Rates: Generally, a higher credit score can help you secure a lower interest rate on your mortgage. This can save you thousands of dollars over the life of your loan. Pre-Approval and Loan Application: Your credit score is pulled during the pre-approval and loan application processes. A higher score can make this process smoother and faster. Determining Buying Power: Lenders use your credit score to assess your risk level. This, combined with your income and debt levels, helps determine how much you can borrow. What Credit Score Do You Need to Buy a House? Different types of loans have varying credit score requirements. Here are the minimum scores needed for some of the most common loan types: Conventional Loan: Minimum credit score of 620. FHA Loan: Minimum credit score of 500 with a less than 10% down payment, or 580 with a 3.5% down payment. USDA Loan: Minimum credit score of 640. VA Loan: No minimum credit score set by the VA; requirements are determined by the lender. Credit Score Guidelines for VA Loans The Department of Veterans Affairs (VA) doesn’t set a minimum credit score for VA loans. Instead, lenders evaluate applicants on a case-by-case basis. Here’s what you need to know: Lender Requirements: Most lenders typically require a FICO score of 620 or higher. However, some may approve loans for buyers with lower scores. Case-by-Case Basis: Each lender assesses the borrower's overall financial picture to ensure they can repay the loan, not just their credit score. How to Improve Your Credit Score Improving your credit score can enhance your buying power and potentially lower your mortgage rate. Here are some tips to help you boost your credit score: Lower Your Debt-to-Income Ratio: Pay down existing debts to improve your ratio. Pay Bills Early: Timely payments can positively impact your credit score. Pay More Than the Minimum Each Month: Reducing your overall debt faster can boost your score. Diversify Your Credit Types: Having a mix of credit types, such as credit cards, auto loans, and mortgages, can positively impact your score. Don’t Close Your Oldest Account: Keeping your oldest account open can improve the length of your credit history, which is a factor in your credit score. By understanding these credit score requirements and following the tips to improve your credit, you can better position yourself for a successful home purchase. Whether you're aiming for a conventional loan, an FHA loan, a USDA loan, or a VA loan, knowing the credit score you need and how to achieve it is the first step toward homeownership.

This week has some big pieces of data that could drive mortgage rate movements. On Thursday, we’ll get a glimpse into the economy with our Q2 GDP reading, and on Friday we get the Personal Consumption Expenditures (PCE) price index, which is the Federal Reserve’s favorite measuring stick for inflation. While we’re not expecting this data to impact the Fed’s decision in their July meeting, it could solidify the expected rate cut during its next meeting in September. Last Week's Mortgage Rate Recap Rates Were Steady Last week, we didn’t see rates move much. Initial jobless claims rose at the end of the week, which added further confidence in the possibility of a rate cut in September. This week’s inflation data, which we’ll divulge further as we look towards the week ahead, could make that rate cut all but guaranteed if the figures fall in line with expectations. This Week's Mortgage Rate Forecast Rates Could Drop We have a big week of news ahead with Q2 GDP, initial jobless claims, and the all-important PCE report coming in the second half of the week. Currently, the 10-year is trading at 4.22%. With some positive inflation data, we could see yields break below 4.17% which would see rates drop further. Any major movements will be expected at the end of the week as the market prepares for and reacts to Friday’s PCE inflation report. Currently, many homebuyers want to keep their current residence to convert into a rental property as they shop for their next home. Depending on the loan type, there are a few factors that are required to use rental income from that existing property to qualify for a new loan. My team created this co-branded flyer to provide clarity on the different circumstances required to qualify. Take a look at the flyer here and feel free to reach out if you’d like me to co-brand it with your contact info before sharing with any prospective buyers you’re working with!

A big domino fell last week that could be a catalyst for lower mortgage rates long-term. Last Thursday’s Consumer Price Index (CPI) showed that overall inflation had dropped by 0.1%. This is the kind of data that the markets have been waiting for as lowering inflation will only increase the Federal Reserve’s confidence to cut rates this year. This week, we could see rates continue to drop if spreads continue to improve for 10-year treasury yields. Last Week's Mortgage Rate Recap Rates Dropped Slightly Last week, rates dropped slightly as the CPI dropped 0.1% in the July report—a sign that inflation is declining. With signs also showing a slowdown in economic growth, many investors sought safer assets such as government bonds, driving the 10-year yield lower and, in turn, mortgage rates. This Week's Mortgage Rate Forecast Rates Could Be Volatile Coming on the heels of a pivotal CPI report, rates could be volatile this week with the potential to drop lower at the end of the week. On Thursday, we will get the latest initial jobless claims report; if we see continued softening within the labor market, the likelihood of the Federal Reserve cutting rates in September will continue to increase, driving rates lower.

Home loans secured by the Department of Veteran Affairs, or as we prefer to call them, VA loans, are one of the best mortgage options available for prospective homebuyers. Alongside the myriad of benefits—which you can learn more about in this blog—are a few unique factors exclusive to VA loans. One of the most notable is the VA funding fee. In this blog, we'll break down what the VA funding fee is, why it exists, the varying costs associated with it, and how you might be exempt from paying it. What is the VA Funding Fee and Why Does It Exist? The VA funding fee is a one-time payment required for most VA loans. The primary purpose of this fee is to offset the cost of the VA loan program to taxpayers and ensure that it remains sustainable for future generations of military homebuyers. Here's why the VA funding fee is important: Cost Offset: It helps cover the administrative costs and potential loan defaults associated with the VA loan program, thereby minimizing the financial burden on taxpayers. Benefit Maintenance: By funding the program through these fees, the VA can continue to offer low-cost mortgages and other benefits to veterans without requiring significant federal funding. Loan Accessibility: The VA funding fee allows the VA to offer loans with competitive interest rates, no down payment, and no private mortgage insurance (PMI), making homeownership more accessible for veterans and service members. Cost May Vary With Your VA Funding Fee The cost of the VA funding fee is not a one-size-fits-all amount; it varies based on several factors, including the type of loan, the borrower's military category, the down payment amount, and whether it's the borrower's first use of the VA loan benefit. Here’s a breakdown of the VA funding fee for different scenarios: No Down Payment: First Use: 2.15% of the loan amount. Subsequent use: 3.3% of the loan amount. 5% to 9.99% Down Payment: First Use: 1.5% of the loan amount. Subsequent Use: 1.5% of the loan amount. 10% or More Down Payment: First Use: 1.25% of the loan amount. Subsequent Use: 1.25% of the loan amount. Cash-Out Refinance Loans: First Use: 2.15% of the loan amount. Subsequent Use: 3.3% of the loan amount. Interest Rate Reduction Refinance Loan (IRRRL): All Uses: 0.5% of the loan amount. It's important to note that these percentages are based on the total loan amount and can be financed into the loan, meaning you don't have to pay the fee upfront out of pocket. VA Funding Fee Exemptions Not all veterans and service members are required to pay the VA funding fee. There are several exemptions available for those who meet certain criteria: Disability Compensation: Veterans receiving VA disability compensation for a service-connected disability are exempt from paying the funding fee. This includes veterans who would be entitled to compensation if they were not receiving retirement or active duty pay. Surviving Spouses: Surviving spouses of veterans who died in service or from a service-connected disability are exempt from the funding fee. Purple Heart Recipients: Active-duty service members who have been awarded the Purple Heart are exempt from paying the funding fee, provided they close on their home while still serving on active duty. Pre-Discharge Rating: Veterans who are in the process of receiving VA compensation for a service-connected disability may also qualify for an exemption if they receive a proposed or memorandum rating before the loan closing. Loan Assumptions and IRRRLs: Loans assumed by another veteran are exempt from the fee, as well as certain IRRRLs under specific conditions. The VA funding fee is a crucial component of the VA home loan program, designed to ensure its longevity and sustainability. While it represents an additional cost, it also enables the VA to offer favorable loan terms to veterans and service members. Understanding the varying costs associated with the funding fee and the available exemptions can help you better navigate the VA loan process and make informed decisions about your home financing options.