What Credit Score Do You Need to Buy a House?

You want to buy a house, but you already know that your credit score is on the poor side of the spectrum. The good news, though, is that you might still qualify for certain types of home loans, as different types of mortgages will vary in the minimum credit scores they are willing to accept. So, what range should your credit score be in before you even think about buying a house? Let’s ask a real estate agent in Alpine, TX!

Credit score ranges

First things first, let’s look at credit score ranges. In the United States there are three credit reporting agencies (TransUnion, Experian and Equifax), all of which individually grade your credit history on a range from 350 to 850. Since not all creditors will report to all three, your score from each credit agency will be different. Keep in mind that a score of 700 is generally considered good, while a score below 620 is generally poor:

  • 740 and higher = great credit
  • 680-739 = average credit
  • 620-679 = fair credit
  • 580-619 = poor credit
  • 500-579 = bad credit

FICO score

There are many steps to the home loan process, but checking your FICO score is the first step a mortgage lender takes when checking if you qualify for their loan. Keep in mind that although there are a number of factors that play into home loan qualification, your credit score is the most important one. So, what is the minimum credit score a person needs to purchase a home? The answer depends on the type of home loan you qualify for.

Here are the typical average minimum FICO scores by mortgage types:

  • Conventional loan: 620 and up
  • FHA 203k loan: 620 and up
  • USDA loan: 640 and up
  • VA loan: 620 and up (some lenders will approve a score of 580)
  • FHA loan: 580 and up

Minimum credit score to get a mortgage loan

First time homebuyers with poor credit ratings may still qualify for an FHA loan, as these loans have lower requirements than other loan options. FHA loans are backed by the Federal Housing Administration, but the FHA doesn’t issue loans itself. What they do is insure them in case the borrower defaults on the loan at any point. It is done this way to reduce the risk of the lender accepting a lower credit score to buy a house.

For an FHA loan with the lowest credit requirements, the borrower must have a score of at least 500 with a 10 percent down payment (this is not typical). The average (and most likely) FHA loan goes to borrowers with a 580 or higher credit score with a 3.5 percent down payment.

In general, your credit score will affect the interest rate you can get. For instance, someone with poor credit will have higher mortgage rates and increased closing costs, and therefore a higher monthly payment. And the higher your credit score, the lower all of this will be.

Contact Carpenter Real Estate today to work with a phenomenal real estate agent in Alpine, TX!

How to Prepare Your Credit for Buying a Home

Like many Americans, this is the year you plan to buy a house. But while you’ve been saving your pennies, checking out neighborhoods you are interested in living in and searching houses online, you may not have considered the important role your credit score plays in your ability to secure a loan. For example, a conventional mortgage loan typically requires an average FICO score of at least 720, and people with scores at 580 may qualify for an FHA loan.

Here’s some information from a realtor in Alpine, TX for how to prepare your credit for buying a home:

  • Review your credit report: The first thing you need to do is check your credit report for any issues a few months before you plan to apply for a mortgage. For those who pay their bills on time, checking your credit for mistakes two to three months in advance should suffice. However, if you know you have late payments or other negative things that stand out on any of your accounts, you might want to start your review six to nine months in advance to allow enough time to remedy any issues.
  • Take care of inaccuracies: You may look at your credit report and find errors like an account you didn’t open, an account that’s not yours or an “unpaid item” that is actually paid off. File a dispute with the credit reporting agency immediately. It’s not unusual for someone to discover an inaccuracy on their credit report, so be thorough.
  • Have several tradelines: You will need at least three tradelines—such as credit cards, car loans, student loans, etc.—that have been active within the past 12 to 24 months to apply for a conventional loan; you need two tradelines for an FHA loan. Talk to you realtor about opening additional tradelines if you need them.
  • Don’t close old credit: Don’t close older credit cards—they can actually help boost your credit score. To keep old cards active, use them every few months and pay them off in full.
  • Don’t open new credit: New credit, meanwhile, can temporarily lower your score. For this reason, avoid opening new credit lines at least six months out from applying for a mortgage.
  • Avoid using credit: You’re excited about purchasing a house, and now you’re in escrow. This may lead you to buy new things for your new house on credit—like furniture, appliances and more—but you should avoid buying on credit (or applying for other loans, like a car loan) before closing. Being in escrow doesn’t mean you’ve got the house; in fact, if you have a debt utilization ratio above 30 percent right before closing, this could disqualify your home loan.
  • Leave money accounts alone: A mortgage lender will ask you to provide several months of bank statements, so don’t close accounts or make large money transfers. To create less paperwork, leave accounts as stable as possible for at least three months.

Are you in the market for a realtor in Alpine, TX? Then call Carpenter Real Estate today!

Is Mortgage Insurance Worth It? Info from a Realtor in Alpine, TX

Whenever you decide to take out a new mortgage, you’ll be offered mortgage protection insurance (MPI). There are several variations of this insurance available, but in general it is used to protect your loan payments in the event you lose your job, have sudden unexpected medical bills or experience a life-changing disability.

But is mortgage insurance actually worth it, or is it just another way for the mortgage company to get more money out of you? The answer primarily depends on your age, health and financial situation. Here’s some information from a realtor in Alpine, TX about whether mortgage insurance is right for you.

Benefits of mortgage protection insurance

Perhaps the most valuable benefit of MPI is that it is handed out on a “guaranteed acceptance” basis. There are very few, if any, questions on an application for MPI that will prevent you from getting the coverage you need, which is especially important for people who have health issues and who often have problems getting other kinds of insurance at a reasonable rate.

If you are someone who works in a high-risk occupation, this is also another way for you to protect your investment and your estate. People in the construction industry, for example, are more susceptible to injury and death on the job, and often have a hard time getting disability insurance. Mortgage protection insurance is an easier policy to get that will provide you with some protection for your home.

Drawbacks of mortgage protection insurance

If you already own your home outright, then MPI doesn’t do anything for you.

In other circumstances, keep in mind that MPI is a declining-benefit policy. You’ll pay a set premium for the entire life of the mortgage, but the payoff amount decreases as you continue to make your mortgage payments.

In addition, it might not always be the best decision to pay off most of your mortgage in the event of your death. Depending on the monthly amount of the mortgage payments, it might make more sense for you to leave behind lump sums to your beneficiaries and allow that money to collect interest while continuing to make the mortgage payments as outlined in your original loan agreement.

If you do decide to go with MPI, make sure you have a plan for how you’ll choose your policy. You shouldn’t automatically go through the same bank or lender providing your mortgage—you should do some shopping around to make sure you can get the best available rates and benefits.

There are also some alternative options you can choose. For example, if you’re considering an MPI plan that would be payable upon your death, you might consider a life insurance policy instead, as the policy would not decline in value over time and would, depending on the value of the policy, cover more than just your mortgage in the event of your death.

For more information about mortgage protection insurance, contact Carpenter Real Estate to speak with an experienced and knowledgeable realtor in Alpine, TX.

Is It Normal to See a Credit Dip After Buying a House?

If you recently purchased a new house, you’ve probably been carefully watching the progress of your credit score, as your rating affects your ability to get a mortgage with lower interest rates. After the purchase of your home goes through, it’s not uncommon for you to experience a credit dip.

Here’s some information from a realtor in Alpine, TX about how you can expect your purchase of a new home to affect your credit score.

Certain factors give a hit to your credit score

You’ll probably start seeing some minor hits to your credit score as soon as you start applying for mortgages with different lenders. Whenever you apply for pre-approval for a mortgage, lenders will perform a credit inquiry to see if your credit is sufficient for them to give you a loan. A hard credit pull essentially tells the algorithm you are actively looking for a new source of credit, which will cause a slight dip in your credit score.

If you want to limit the effect these hard credit pulls can have on your credit score, you should apply for pre-approval with several different companies in a single two-week span. With some credit scoring models you might be able to get away with drawing them out over a longer period of time, but by limiting them to a shorter time period you also limit the hit that your credit score has on you.

Actually opening up a new mortgage will cost you even more points in your credit rating, especially if it’s the first mortgage you’ve ever taken out. There will be a massive increase in debt, which will cause your score to drop. However, by making your mortgage payments on time, you’ll slowly build that credit score back up.

Debt can be a good thing

Keep in mind that adding to your credit mix can actually help your credit profile in the long run. About 10 percent of your credit score is determined by your credit mix, so if you have a greater variety, you’ll actually help your score.

And again, by paying your mortgage on time every month, you’ll start to build your credit score up again relatively quickly. In fact, for many people, it will only take a few months before your score is even higher than it was before you actually started applying for loans!

So, if you see your credit score decrease during and immediately after the home buying process, don’t fret. In the long run, you’ll actually help your credit score so long as you’re able to continue making your monthly payments in full and on time.

If you have any further questions about how purchasing a new home can impact your credit rating, or questions about any other financial issues that might arise as you seek a mortgage, feel free to contact a realtor in Alpine, TX. Get in touch with Carpenter Real Estate today, and we’ll be happy to provide you with any further information you want or need.

What Is a VA-Guaranteed Home Loan?

If you’re a veteran, you’re well familiar with many of the programs designed to get you up and running as a private civilian. From benefits that help you get back to school, to programs designed for work placement and community leadership, there are many systems set up to make life just a little bit easier. One of the biggest is access to a VA-guaranteed home loan.

If you’re unfamiliar with a VA-guaranteed loan, it’s something your realtor in Alpine, TX can tell you a lot about. Not only is this a common type of home loan, it’s one that virtually any veteran can take advantage of to establish their homestead after active duty.

All About VA Loans

This type of loan is typically issued by a private lender and covers much more than a conventional home loan—including eliminating the need for a down payment when it comes time to close a sale. You’re also guaranteed an exceptional interest rate with a VA loan, which is often close to the current market lows. Plus, there’s no monthly mortgage insurance premium to pay! Finally, there are no prepayment penalties to worry about.

Many lenders are more than willing to give VA-guaranteed home loans because the lenders themselves are protected from loss. In the event that something happens and you can’t pay back your loan, there are protections in place that mitigate liability. The U.S. Veterans Administration will actually provide oversight in foreclosure situations to find alternatives that are beneficial for everyone involved.

Is a VA Loan Right for You?

It goes without saying, but you have to be a military veteran (honorably discharged) to apply for a VA-guaranteed home loan. This is the chief stipulation—alongside the idea that the veteran in question must also live on the premises in the home the loan is being applied to.

In addition to the veteran aspect of the loan, anyone applying for a VA-guaranteed loan must have acceptable credit worthiness and sufficient income when it comes to being able to afford mortgage obligations in addition to other financial demands. VA-backed loans are determined on a case-by-case basis, but most veterans are eligible as long as they have available entitlement.

The other critical thing to remember about VA-guaranteed loans is that they’re made through third-party lenders, who may have their own stipulations for who qualifies. This could mean different credit score worthiness or income demands. It’s important to remember this when pursuing an application.

Learn More About VA-Backed Loans

If you’re a veteran thinking about a VA-guaranteed loan, be sure to speak with a qualified realtor in Alpine, TX. They’ll be able to provide you with the information you need to apply for this type of loan and can help guide you through the steps of finding a home that meets your criteria, as well as those of a lender. In many cases, this type of loan can trump even FHA or other housing authority-backed mortgages, making it a smart opportunity for those who have previously served.

What Is an FHA Loan?

If you’re just getting into the home buying market and are working with a real estate broker in Alpine, TX, there are probably quite a few terms being thrown around that are new to you—especially when it comes to the banking aspect of things. Mortgage terms in particular can be hard, including abbreviated terms like FHA. In fact, this is one of the first things new homebuyers come into contact with.

FHA loans are Federal Housing Administration loans. Often utilized by first-time homebuyers, these loans are popular because they require a much smaller down payment upfront. For most general mortgage loans, lenders expect between 10 and 20% of a down payment. For FHA loans, that number can shrink down to as little as 3.5%. It’s a much more manageable number!

FHA loans come with some stipulations, however. A lower interest rate is accompanied by mortgage insurance premiums that need to be paid, just in case the applicant was to default on their loan.


Not just anyone can apply for an FHA loan. In fact, there’s a strict list of criteria that need to be followed by applicants:

  • Borrowers must have worked with the same employer for the last two years.
  • Borrowers must be able to prove citizenship and residence for the last two years.
  • Borrowers must pay a minimum 3.5% down payment on the total value of the home.
  • FHA loans can only be applied to primary occupancy residences.
  • Properties must be appraised from an FHA-accredited appraiser.
  • Annual payments of the FHA loan must not exceed 30% of the borrower’s income.
  • Total billing obligations must not exceed 43% of borrower’s income.
  • Borrowers must have a credit score of at least 580 to qualify.
  • Borrowers must be at least two years removed from any bankruptcies.
  • Borrowers must be at least three years removed from any previous foreclosures.

There’s a lot to be considered when applying for an FHA loan! Thankfully, these rules and regulations are geared towards approval for those who are responsible individuals, who may simply not have the means to outright afford a major down payment on a home. Again, this particularly applies to younger first-time homeowners who may not be as financially established.

Is FHA Right for You?

If you’re thinking about becoming a homeowner but just can’t put together the savings for a big upfront deposit on a house, it’s worth talking to a real estate broker in Alpine, TX. You might qualify for an FHA loan without even realizing it! Best of all, a real estate agent will be able to break this special type of loan down as it applies to your unique situation, giving you real-world facts and figures to work with.

Looking into FHA loans is a great way for younger, first-time homebuyers to get familiar with the buying process. And, obtaining and paying an FHA loan is a superb way to build your credit worthiness over time. Simply put, it’s a great way for new homeowners to grow into maturity, without being cash-strapped and set up for financial hardship along the way.

Market Value vs. Appraised Value

Real estate is truly a numbers game. From the price you list your home at, to the price you’re willing to pay for someone else’s home, to the assessed value of a property, there are a lot of different numbers floating around that need to be considered. But, before you can figure out how to properly leverage an offer, it’s important to understand the values you’re working with.

Most important to understand is the market value vs. the appraised value of homes for sale in Alpine, TX. These two numbers may be similar in nature, but what they represent has a profound effect on how you list a home or what kind of offer you decide to put in on one.

Market Value

Market value is what someone is theoretically willing to pay for a home. It’s usually a number that’s in flux and is greatly affected by market conditions and external factors, such as the price of comparable homes in the area.

Market value is important to understand because it helps homeowners and buyers alike come to a resolution. For example, if the market value of a home is around $300,000, it gives a seller a figure to list their home at, with the expectation that someone would see that value as reasonable. For buyers, it establishes a baseline for what they can expect to get for their money out of comparable homes and can drive bidding.

Appraised Value

Appraised value is what the bank is willing to pay for your home—more specifically, the amount of a mortgage loan they’ll cover. It’s the physical nature of the property in its entirety and the value is assessed in much the same way as market value in terms of looking at exterior variables like location and comparable homes.

Think about our $300,000 house. If that’s the appraised value, a buyer might not be as willing to bid up on it, knowing the bank might ask them for a larger down payment or reject their mortgage application if it exceeds that value. Likewise, a seller might use appraised value to set a more lucrative price point based on what they previously bought the home for years ago.

How One Affects the Other

Market and appraised values often clash. For example, if market value is higher than appraised value, it could mean homeowners have to pay more upfront for their prospective homes. Likewise, if appraised value is lower than market value, it can signal inflation in the market, which leaves sellers feeling great and buyers in a bubble. Both values are important individually and when juxtaposed.

At the end of the day, the price you set for your home for sale in Alpine, TX or the price you’re willing to pay need to both be reflective of market and appraised values. Finding a price point that plays nice with both of these values is the smartest way to facilitate a transaction that’s smooth and free of hassles and headaches for both buyer and seller.

Is It a Good Idea to List My House for Over the Fair Market Value?

Everyone wants to get the best price for their home when they put it up for sale on the market. With this mindset, it may seem like a smart idea to jack up the listing price well above fair market value. For example, if your home is valued at $250,000, you might be tempted to put it out there for $275,000 just to see if anyone will bite at that price.

Unfortunately, trying to bump a property for sale in Alpine, TX well over its fair market value almost always ends in failure, for a number of reasons. Let’s take a look at some of the reasons overpriced homes end up being a debacle and why straying too far above market value will end up costing you in the end.

Missing Your Audience

Just because you list your home at $275,000 doesn’t mean someone will pay that price. In fact, you might end up appealing to an audience that’s not quite interested in your home. Worse still, trying to push your home into a higher demographic can dramatically shift its perception. Instead of being a high-end home in a lower price range, you might end up coming off as a low-end home in a high price range. Perception is everything when it comes to attracting the right audience.

Starting a Bidding War

In most cases, a bidding war is great for homeowners—it means there are multiple sellers who are willing to pay a premium for your home! In the case of an overpriced home, however, the bidding war might be between you and a single prospective buyer. In this case, the buyer will likely have leverage. If they know a home is overpriced, they’ll undercut your asking price as much as they can and, if you do eventually come to an agreement, it’s likely going to be for less than market value.

Stepping the Price Lower

When homes are listed far above their market price, they can tend to be stagnant listings. People avoid them because they know they’re overpriced. So, in order to attract new viewings, many homeowners will start to step down the price incrementally, little by little. Over time, this gives the property a negative perception. People start asking “What’s wrong with it?” or “Why does the price keep falling?” It gives off the vibe that a house is defective or that the owner is having trouble selling it.

Creating False Hype

If a home is appraised at one value and listed well above that value, it can create hype. Buyers think there must be something truly amazing about it to warrant such a jump! When they check it out and find nothing overly exceptional, the hype is immediately derailed. This is one of the fastest ways to kill interest in your home.

The moral of the story is that while it might seem like a good idea to overprice your property for sale in Alpine, TX and see who bites, the better option is instead to price it fairly. You’ll generate more interest and come across as more reasonable, resulting in more interested offers and, potentially, a sale that’s as good or better than you’re asking.

Why Should I Hire a Real Estate Agent?

A natural first step for many people about to enter the real estate market is to find a good real estate agent in Alpine, TX. This all-important step comes with a huge number of benefits—namely having someone on your side who is well-experienced within the market. It’s not every day you buy or sell a home; for a real estate agent, however, this is an everyday occurrence!

Buyers or sellers who decide to jump into the market without an agent might be fine at first, but when it comes down to actually facilitating a sale, they’re quick to become lost. Working with a real estate agent from start to finish is a great way to cover all of your bases and give yourself peace of mind when it comes to this life-changing experience.

Filtering Out the Spam

There can be hundreds of home listings within a 10- or 20-mile radius of you. How do you know which ones to check out, versus which ones to pass up? More than just narrowing down by price, a real estate agent will hand-select potential homes that are ideal for you based on a number of traits. From nearby schools, to amenities offered, to locale and more, an agent will go through the trouble of filtering out unworthy homes, so you can dedicate your time to looking at true prospects.

As a seller, this same benefit applies. Don’t waste time entertaining buyers who aren’t ready to make a serious offer or ones who want to lowball you and see what happens. An agent can be your mouthpiece, turning away these types of interactions so you can sit down with serious buyers only.

Understanding Cost

Whether you’re a buyer or a seller, understanding the pricing game is crucial. When buying, you need to know things like the appraised value of a home, its sales history or the property taxes paid on it over the past year. As a seller, you’ll want to know comparable home values in your area, appraisal value and what break points people stop searching at. All of these variables factor in how much you should offer on a home or how much you should list your home for. A real estate agent in Alpine, TX is your key to getting this information.

Paperwork Duties

Buying or selling a home is a process riddled with paperwork. Unless you want to thoroughly read every single form and try to understand which forms are needed for specific situations, it’s best to put this task on a real estate agent. They’ll provide you with the right forms in a timely manner, so you can move the buying or selling process forward swiftly and accurately.

Answering Your Questions

Both buying and selling are scary prospects! Above all else, a real estate agent will quell your fears by answering any questions you have or providing insight into your decisions. Think of them as a Sherpa who can lead you down a positive path. With a good agent on your side, you’ll avoid the potential pitfalls of a complex, complicated process.

Seven Simple Ways to Boost Your Home’s Value

It’s important to always think about your home as an investment. You put a lot of money into buying one and years later you should be able to sell it for a profit. And while natural real estate appreciation is often enough to drive the value of your home upward over time, it’s also a smart idea to make some upgrades along the way. The more money you put into your home, the more you’ll get out of it when it comes time to list your home for sale in Alpine, TX.

It’s not enough to just funnel money into your living space, however. In order to reap the biggest boon from your investment, it pays to put money into upgrades that will have the highest long-term value and appeal. Take a look at seven simple ways to boost your home’s value and where you should be putting your money for maximum return on investment:

  1. Countertops and cabinets: In spaces like the kitchen and bathroom, countertops and cabinets set the tone. An investment in quartz or other natural stone can dramatically boost the value—both perceived and real—of your home.
  2. Floors: It’s estimated that quality, well-maintained flooring can boost the value of your home by as much as three percent! Natural wood flooring is a clear leader in this area, followed closely by luxury vinyl plank.
  3. Space utilization: Having versatile space in your home is going to raise its appeal and eventual selling price on the market. Why? Because not everyone has the same space demands. A bedroom for you might be a home office for someone else. Keeping spaces versatile means bolstering the appeal of your home with minimal investment.
  4. Efficient installations: The name of the game these days is energy efficiency. You don’t need solar panels affixed to your roof to woo potential homebuyers, but you do need emphasis in other aspects of the home. Energy efficient windows, appliances and even lightbulbs are all valuable ways to boost the dollar figure next to your home’s worth.
  5. Paint: Just about the simplest thing you can do to boost your home’s value and appeal is slapping on a new coat of paint. A good paint job with a tone-neutral color can go a long way towards improving the allure of a space—adding as much as a full percent to your overall home value.
  6. Lighting: Lighting is crucial for comfort and perception in a home. Before you list your home for sale in Alpine, TX, give its perceived value a little bump with the right lighting. Not only can it accent the unique architecture of your home, it’ll also help set the mood and cast light on the nuances of your space.
  7. Fixer-upper items: A well kept home is a happy one, and one that will retain its value for longer. Make yourself a big list of all of the little things you’ve been putting off and get to work fixing or improving them. Each item checked off can add a fraction of a percent back into your home’s value, which adds up fast!

It doesn’t take drastic remodels or major renovations to boost your home’s value. Give some thought to the seven items listed above and see what kind of value you can recoup in your home.