By Ying Emma Zhang
Feb 22, 2013
A: First, you must strengthen your credit score. One old rule still applies: The higher your credit score, the lower your down payment and monthly payments. Below 660 or 680, you’re either going to have to pay sizable fees or a higher down payment, and in today’s tightened mortgage regulation, that’s pretty much the cutoff score for getting a mortgage. On the other end, a score of 700 to 720 will get you a good deal and 750 and above will garner the best rates on the market.
Make sure you have enough savings for a down payment and closing costs. Nowadays, depending on your credit and financing, you’ll typically need to save enough money to put at least 20 percent down.
You also need to build a healthy savings account. This is over and above your money for the down payment and closing. Your lender wants to see that you’re not living paycheck to paycheck. If you have three to five months’ worth of mortgage payments set aside, that makes you a much better loan candidate. And some lenders and backers, like the FHA, will give you a little more latitude on other factors if they see that you save a cash cushion.
Lastly, get pre-approved for a mortgage. If you are a serious home shopper, you will need to get financing in place.
— Ying Emma Zhang, William Raveis Real Estate, 917-414-8942