Pre-Purchase FAQ

Frequently Asked Questions

What do you charge for pre-purchase/first-time homebuyer counseling?

Pre-purchase/first-time homebuyer counseling is free of charge.

What is a credit score?

A credit score is a number determined by a statistical model to predict the likelihood of a borrower repaying a credit obligation. It is based on previous credit performance, current level of indebtedness, amount of time credit has been in use, pursuit of new credit and types of credit available.

The goal of a credit score is to rank an individual in relation to others and to industry standards for the purpose of making lending decisions. The higher the score, the more likely the borrower is to pay his/her bills on time. Thus, lenders offer borrowers with higher scores better interest rates and stipulations.

Credit scores range from approximately 300 (lowest) to 850 (highest), as each credit bureau has its own scoring model with different highest and lowest scores.

How high a credit score do I need to purchase a house?

That depends on your mortgage program. Many programs accept less than perfect credit and still offer good interest rates. However, a lower credit score can result in your paying a higher interest rate. Make an appointment to meet with one of our housing counselors to undertake a credit report review. At that time our counselor will give you a plan for improving or correcting your credit report, to help you increase your score.

Should I close all/any of my credit card accounts?

Not necessarily. This will depend on your personal situation. In some cases, closing your accounts may actually decrease your credit score. Our counselor can help you determine what best to do.

Will lenders require all my debts to be paid off before I buy a house?

Mortgage lenders do not normally require that any debts be repaid in full. However, the minimum payments required for any outstanding debts will impact your debt to income ratio and may lower the amount of mortgage loan for which you will qualify.

For how high of a mortgage do I qualify?

This will depend on your gross income and outstanding debt obligations. Different lenders have different debt to income ratios they find acceptable when they are asked to pre-qualify you for a home loan. When you are ready to purchase a home, the first step is to develop a budget to establish if you can afford to make the payment on the loan for which you qualify. ClearPoint can help you do so in a counseling session.

Although you may be able to qualify for a mortgage loan amount which is higher than you can truly afford,  a comprehensive analysis of your budget will enable you to establish how much house that you can truly afford.