Here is what occurred when I decided to apply for a mortgage. There was a time in my life when I had a perfect credit score. While I don’t strive for one these days, I did everything to keep it at 850.
That included paying all of my payments on time and refraining from applying for new credit cards that I didn’t require. But, when my husband and I decided to buy a house together around 12 years ago, we needed a mortgage to do it.
I was well aware that my credit score would suffer as a result of the situation. Fortunately, the blow was not too severe. Therefore, before you look for the best reverse mortgage companies, let’s know the tips.
A Small Credit Score Drop
If you submit the application loan or credit card, the creditor or issuer must do a credit check to ensure that you are a responsible enough borrower to authorize. This entails obtaining your credit report. This has known as a hard inquiry, and it might result in a temporary reduction in your credit score.
That’s precisely what happened to me when I tried to get a mortgage. My credit score wasn’t flawless at the time, but it was near. I recall being unhappy because applying for a home loan resulted in a five-point decline.
Credit Score of Five-point
A five-point decline in my credit score, on the other hand, would not bother me at all. Because my credit score is high, a slight dip will not exclude me from obtaining a low-interest loan or a new credit card.
Because interest rates are so low last summer, my husband and I decided to refinance our mortgage. My credit score lost roughly seven points as a result of the process. But it wasn’t a significant concern.
Don’t Hassle Over A Minor Credit Score Drop.
If you’re considering getting a mortgage (or refinancing your current mortgage) from reverse mortgage companies, you should expect your credit score to drop somewhat as lenders check your credit report to determine. This is if you’re a suitable borrowing prospect or not.
However, it would help if you were not concerned about it. In the long term, owning a mortgage may help you boost your credit score. If you routinely make your monthly payments on time, the credit bureaus will be notified.
It’s usual practice to shop around for a mortgage with many lenders. If you go this way, try to complete your rate shopping within the same 14- to 30-day time frame. You have numerous lenders check your credit report in a short period.
All of those hard inquiries will be counted as a single one, resulting in a modest credit score hit. It’s similar to what we just described. However, you stretch out your mortgage applications across too many weeks.
The Bottom Line
Of course, having a good credit score is essential when applying for a mortgage. A credit score in the upper 700s or above may require obtaining the best mortgage rates.
But if that’s your score, don’t be concerned about a five- or seven-point decline throughout the house loan application process.