Winter Weather Closing

Due to hazardous winter weather conditions, these locations are currently closed today, January 22: Okoboji, Spirit Lake, Sherburn.  The following locations will close at 1:30 p.m.:  Armstrong, Fairmont, Jackson, New Ulm, Westbrook and Windom.  Sioux Falls and Wall Lake will remain open for normal business hours.

From Our Blog

Prospective homebuyers need to know your credit score.

Buying a Home: Know your credit score

The decision to buy a home isn’t an easy one to make. The purchase itself is an incredibly involved process. But the journey begins well before you start to tour potential properties to buy.

The first step in buying a home is determining your budget. Once you have that, you can move on to the next step: finding out your credit score, and deciding how to proceed based on that.

What is a credit score?

Your credit score is a 3-digit number calculated based on your financial history. According to myFICO, It takes into account five factors:

Your payment history, or whether or not you pay your bills on time (and preferably in full)

How much you currently owe. A big factor in this is your credit utilization, a ratio comparing the amount of credit you’ve used and the amount of credit you have available. Ideally, this shouldn’t exceed 30 percent.

Your length of credit history. In lenders’ eyes, the longer you’ve been paying bills responsibly, the more likely you are to understand your responsibilities with a mortgage. This is determined by looking at how old your oldest open form of credit is. So, if  you’ve had a credit card for 20 years, but cancel it and close that line of credit, it’s no longer contributing to this aspect.

Any new credit you have. It’s best to only take out one loan, credit card or other form of credit at a time.

Your credit mix. Being in charge of a wide range of financial responsibilities (like credit cards, auto loans and student loans) tells lenders that you’re capable of handling a mortgage.

Why does it matter?

Lenders feel more comfortable offering credit to people who know how to manage their finances and who don’t have a history of neglecting their bills. This is reflected in a higher credit score. A low credit score might be a sign that you’re forgetful when it comes to bills, aren’t familiar with the process of paying dues or have a history of defaulting on loans.

Can people with low credit scores get a mortgage?

Yes, but it might be a little bit more challenging and more expensive due to higher interest rates. It’s common for borrowers with low scores to consider an FHA mortgage, which is backed by the Federal Housing Administration. One of the perks of an FHA loan is the minimal down payment required. If your credit score is 580 or higher, you only need a 3.5 percent down payment.

 

Know your credit score

When you know your credit score, it can help you be more confident in deciding whether you’re ready to purchase a home.  Or, it may provide you with an opportunity to improve your credit, if necessary.