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How Your Credit Score Affects Your Mortgage Application in Orange County

Posted by Summit Lending on December 20, 2016
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First things first: when buying a home in Orange Country, your credit score is among the most influential factors in the process, but not the only factor. When applying for a mortgage in Southern California, your lender will use your credit score to determine your viability as a candidate for a homeownership loan.

So, why does a high credit score equal low mortgage interest rates? There are a few reasons, but to better understand your financial position when buying a home, we must first understand what's at work when it comes to credit scores and mortgage applications in Southern California.
  1. A High Credit Score Vouches for You
    When setting lending terms with potential homebuyers, lenders want to know that you have a history of paying your debts on time. High credit scores demonstrate a traceable pattern of paying debts in a timely manner, which inspires confidence in a mortgage lender.
  2. Credit Scores Act as a Personal Habit History
    Credit scores are calculated by a few different measurements: payment history, balances, the types of credit you maintain, and a few other factors. Essentially, your credit score tells a lender much about your financial history. Solid credit scores demonstrate good habits, making lenders far more comfortable in working with you to buy a home in Orange County.
  3. Slight Changes in your Credit Score Can Go a Long Way In a recent Los Angeles Times article, much is made of the difference between a good credit score and an excellent credit score. The point is that even a few digits' difference in credit score rankings can determine whether you pay a 3.5% 30-year-fixed-rate mortgage, or a 3.75% mortgage. It may not seem like a lot, but over the years, those slight differences in rates can add up to thousands and thousands of dollars.
  4. Debt-to-Income Ratios Say a Lot Even if you have a good credit score, the amount of debt you have in relation to your income says a lot about your ability to pay it off, and the timeline in which you could realistically do so. Lenders take this into consideration when crafting a mortgage deal, because they understand the financial resources at your disposal to pay your debt.
Keep in mind an important detail that The Los Angeles Times touches on: just because one lender doesn't qualify you for a mortgage loan, doesn't mean another won't. Shopping for mortgage rates is a key component of landing the best rate out there. Credit scores certainly make a large impact on your mortgage rates, but the right mortgage lender will find the terms that work for you. At Summit Lending, we work individually with potential homebuyers in Orange County to ensure that all their homeownership needs and goal are addressed.

Summit Lending is a reputable, local mortgage broker and lender, serving Orange County, Riverside County, San Diego County, and Los Angeles County housing markets. Summit Lending's team has the experience necessary to help you with all your home financing needs, whether you're a first-time buyer or you've bought and sold multiple homes.

Based in Huntington Beach, CA, with offices throughout Southern California, we can be reached online, on Facebook or via phone at 888-451- 9006. From conventional fixed rate loans to Jumbo loans, VA loans and cash out refinances, we are eager to help you accomplish your short and long term real estate financing goals. With a five-star rating on Yelp! and a 100% response rate, Summit Lending has built an excellent reputation for customer-first service when it comes to real estate lending.