Now is the time to improve your credit score. Here’s why.
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In the real estate world, one of the consequences of the coronavirus is that mortgage lenders now require higher credit scores from buyers looking to qualify for a loan.
Before COVID-19 hit, the minimum score they were looking for was 640. Now it’s 660. If you try qualifying at 640, you can expect overlays to be added to the qualifying process. Overlays are extra layers of information you must provide. One of these layers, for example, is reserve funds. Usually, you need up to six months’ worth of reserve funds in the bank before you can close on a loan. If your credit score is less than 640, you may be asked to provide a year’s worth of funds.
If you try qualifying at 640, you can expect overlays to be added to the qualifying process.
So if you are looking to buy a home, now is a great time to work on your credit score and prepare for overlays. If you’re not prepared, the qualifying process will be much more difficult, and you might not be able to buy a home. On the plus side, you may also be able to receive down payment assistance during this time, so be sure to ask your lender about that.
As always, if you have questions about this or any real estate topic, don’t hesitate to reach out to me. My team and I would love to help you.