I have a FICO score of 658 and enough for a 60% down payment. Can I qualify for a mortgage?
The last (4) years my FICO score dropped 100 pts to 658. My question is; I have a prospect to buy my house, which I have 40% equity in? Do you think my credit will gain points once I pay off the 60% debt on the current house? I am trying to establish if I will qualify for a new mortgage if I am putting 50-60% down.
The down-payment is one small part of a larger "qualify mortgage" question.
A mortgage lender wants three things from a potential customer: Steady income, a relatively clean recent credit history, and a debt-to-income ratio of 35% or less. Customers who qualify for a mortgage have all three of these qualities, plus a down-payment.
Start with Mortgage Basics to Know Before You Apply for a Loan. Next, I recommend you download a Uniform Residential Loan Application (Form 1003), complete it, and resume your mortgage shopping. Then, go to the Bills.com mortgage saving center for no-cost, pre-screened quotes from mortgage lenders.
Credit Report
Next, go to AnnualCreditReport.com to get a no-cost, no-obligation copy of your credit report from each of the three major consumer credit reporting companies (commonly called "credit bureaus"). Review your report and dispute any inaccurate listings.
To find out more how your credit score is calculated I recommend you read an article I wrote explaining FICO Score Calculation. This should give you a much clearer understanding of how credit scores work.
Debt-to-Income Ratio
Finally, lenders calculate and analyze your debt-to-income ratio to determine the size of mortgage you can afford. See DTI: Debt-to-Income Ratio Information to learn how to calculate your debt-to-income ratio.
Given the amount you have available for a down payment, you should be able to qualify for a mortgage if you have a steady income and a low DTI.
I hope this information helps you Find. Learn & Save.
Best,
Bill
The Latest on Mortgage Rates
No surprise that mortgage rates fluctuate. If you are thinking about purchasing a home or maybe considering refinancing your current mortgage, then you want to be up to date on mortgage rates.
Mortgage rates April 3, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 3, 2024 stands at 6.82%. This reflects a 3 basis points increase from the previous week's rate.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
Additionally, Freddie Mac reports that the 15-year mortgage rate for April 3, 2024 is 6.11%, indicating a 10 basis points decrease from last week’s rates.
What does the mortgage rate mean for you?
Mortgage rates play a vital role in determining your monthly payment. Let's take a look at the avergage interest rates (APR) for April 6, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:
- For a 30-year conventional loan, the interest rate is 6.95%.
- If you opt for a 15-year conventional loan, the interest rate stands at 6.13%.
Using the rates mentioned above, a $279,082 30-year-year mortgage would result in a monthly payment of $1,847. On the other hand, a 15-year mortgage would require a monthly payment of approximately $2,374.
Experience a smooth mortgage process: Shop around and get pre-approved today!
Shopping around for mortgages and getting pre-approved can make your home-buying or refinancing process easier. Ready to take the plunge? Check Out mortgage rates now for the best options available.
