Minnesota Valley Credit Union

My First House (page 3 of 5)

Understanding Mortgages

A mortgage is a temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of debt.  Within your mortgage there are specific areas that are important for first time home buyers to understand.

Credit & Mortgages

In order to get a mortgage, especially one with a low interest rate, you usually need to have a good credit score. The most common scoring model is the FICO score, issued by Fair Isaac Corporation. Scores range from 300-850 – the higher, the better. Your score is calculated using data from your credit report, which is compiled by three bureaus: Equifax, Experian, and TransUnion. A lender may check your score from all three bureaus or only one. Many lenders require a score of at least 680 to get a mortgage, and those with a score in the mid-700s and above usually get the best interest rates. If your score is lower than 680, you may only qualify for sub-prime loans, which usually have a high interest rate, or find it difficult to get any loan

Reviewing your credit report regularly is a good idea, but it is a particularly important to do so before seeking a mortgage. Even if you always make your payments on time and have a low level of debt, your credit report could contain score-lowering errors. Check your report at least 60 days before you plan to apply for financing, as it can take some time to resolve issues.

You can obtain your credit report from Experian, Equifax, and TransUnion free once a year through the Annual Credit Report Request Service. Scores can be purchased for a fee. If you see any errors on your report, send a dispute letter to the relevant credit bureau(s) indicating which information is incorrect. They must investigate your claim and remove unverifiable information.

CLICK HERE to continue to step 3 (Finding your home & making an offer)

Calculate Your Mortgage Payment

Loan Calculator ImageUse our loan calculator to calculate for your payment amount, how much you'll need to borrow or the term you'll need to finance.
MORTGAGE CALCULATOR

Credit Tip

A credit card can be a good way to build a positive credit history.  CLICK HERE to learn about MVFCU's Visa Classic Credit Card.

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Saving to Buy