Your credit history is one of the most important factors that lenders consider when you apply for a mortgage in KC. Because of the financial crisis, Millennials are less likely to have a credit card than their parents, thus leading to less credit history. As a result, they are not as likely to build up the necessary credit to secure a home loan. By building up a good credit score, Millennials will have more financial options and negotiating power.
The benefits of having good credit include:
- Better chances for loan approval
- Lower interest rates
- Larger loans
Simplifying the Loan Approval Process
Having good credit does not necessarily guarantee that you will be given a mortgage in KC, but it is among the largest deciding factors. In addition, it will give you more confidence that you may be approved. If you have a fair to poor credit history, it’s possible you may not qualify for a home loan at all. Therefore, it’s essential to keep your credit as consistently healthy as possible.
Attaining Lower Interest Rates
Sometimes, you can use your credit score as leverage try when attempting to negotiate a better deal for a mortgage in KC. The interest rate you receive is directly related to your credit score and other financial factors including:
- Debt-to-income ratio
- Down payment amount
The better your credit score, the better your interest rate will be, allowing you to save more money throughout the life of the loan or to pay more of your principle each month.
Negotiating Larger Loans
The amount a lender will let you borrow is based on your income and your credit score. With a good credit score, you will be able to borrow more money because you have shown that you are able to pay back what you borrow on time. A good credit score shows that you are able to make your payments on time, making you a safe home loan applicant.