WHAT YOU NEED TO KNOW ABOUT CREDIT SCORES WHEN
BUYING A HOME IN MARYLAND AND VIRGINIA

It's very important for Maryland and Virginia home buyers to

1. Know your credit scores
2. Protect your credit scores
3. Improve your credit scores

Number 1. Maryland and Virginia home loan mortgage companies use a home buyer's credit score as the primary source of information to determine what type of mortgages the home buyers will qualify to use and what interest rate will be charged for the loan types that the buyer may want to use.

Number 2. Once you decide to buy a Maryland or Virginia home for sale, be careful about adding "INQUIRIES" on your credit report. Some type of Inquiries may lower your credit scores and thereby lower the types of loans available to you and raise the interest rate that you'd be charged.

Number 3. Keep only 2-3 active credit card accounts. The more open cards you have, the higher your "available credit" and the higher the risk that you'll increase your balances.

Keep balances low as a percentage of the credit available. Pay off every month if possible.

Bring any accounts with arrears up to date. This information will be reported by the creditor and your score will improve marginally.

FOR HOME BUYERS WHO NEED CREDIT REPAIR:
Pay off any accounts in default. This will improve the scores, but marginally.

Pay off any "Charge-off" accounts. The creditor may have "charged it off" as uncollectible, but it's still there. You CANNOT obtain a mortgage loan for real estate in Maryland or Northern Virginia with "Charge-off" accounts on your record with a balance showing. Further, any liens, judgments or other accounts, no matter how old, must be paid. THEN the account must age at least 6 months to reflect a pattern of good credit.

ABOUT "SUB-PRIME" MORTGAGE LOANS
There are lenders and investors who will lend mortgage secured money to Maryland and Virginia home buyers with low credit scores - FOR A FEE. The interest rates on these loans may be 2-4 percent higher than that for a borrowers with higher credit scores. Further, the loans usually come with a high "up-front" costs of 2-4 POINTS, meaning pre-paid interest to obtain that loan, even at the high interest rate.

HOWEVER, home buyers looking to buy real estate in Maryland or Northern Virginia may be willing to pay the extra fees and interest rate as the cost of buying a home. Once the home owner completes the purchase, has a home, can benefit from the home loan interest tax deduction, PLUS, realizing the appreciation on the Maryland or Virginia real estate that they own, it may very well be worth the cost for a reasonable amount of time until the credit scores can be improved and the home owner can refinance to a lower interest rate loan.

WHAT SCORES DO I NEED FOR A GOOD INTEREST RATE?
Over 800 - Superior and will receive the lowest interest rate. Approx. 20% of borrowers.
730-800 -Excellent and will receive a good interest rate. Approx. 20% of borrowers.
680-730 - Good and will receive a good rate slightly lower than above. Approx. 20% of borrowers.
630-680 - Good, but rate will be higher than above. Approx. 30% of borrowers.
Under 630 - Considered low and will be charged a higher rate than above. Approx. 10% of borrowers*

* Many more consumers have less than 630 credit scores, but are not in the market for a home loan.

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WHAT YOU NEED TO KNOW ABOUT CREDIT SCORES WHEN BUYING A HOME IN MARYLAND AND VIRGINIA

WHAT YOU NEED TO KNOW ABOUT CREDIT SCORES WHEN
BUYING A HOME IN MARYLAND AND VIRGINIA