Blog #90: Your Credit Score: The Hidden Key to Homeownership

Why Credit Matters When Buying a Home

At Mervin Morgan Realty and Property Management LLC, we often meet clients who are ready to take the leap into homeownership—but they’re unaware of how significantly their credit impacts the process. Before you pick out the perfect neighborhood or start browsing listings, it’s crucial to understand the role credit plays in securing a mortgage.

🏡 What Is a Credit Score and Why Does It Matter?

Your credit score is like a financial résumé. It gives lenders a snapshot of how responsibly you’ve handled money in the past, including your ability to pay back debts. Mortgage lenders use this score to determine:

• If you’re eligible for a home loan

• How much they’re willing to lend you

• What interest rate you’ll receive

• How much you’ll need to pay upfront (down payment) 

• What kind of loan program you may qualify for (FHA, conventional, VA, etc.)

💳 The Impact on Your Mortgage

Let’s say you apply for a $300,000 mortgage:

• With a 760 credit score, you might secure an interest rate of 6.25%.

• With a 620 credit score, your rate could rise to 7.75% or higher.

• Over a 30-year fixed mortgage, that’s a difference of over $80,000 in interest. That’s money you could be saving or investing elsewhere.

📉 Poor Credit Also Affects:

• Loan approval chances – Lenders may deny applications below 580.

• PMI (Private Mortgage Insurance) – Low scores often require it, adding to your monthly cost. 

• Down payment amounts – Some low-credit buyers may need to put down more than 10–20%.

👣 Next Steps:

If your credit needs work, don’t panic. We specialize in helping buyers understand their credit, create realistic improvement plans, and walk the road to homeownership step by step.