Your credit score is one of the most important considerations in the home-buying process, determining not only the approval of a mortgage, but also the rate attached to it.
As a first-time homebuyer, you may be wondering what the ideal score is. A recent update from the Ellie Mae Millennial Tracker™ may shed some light on the answer.
According to the Tracker, the average FICO score of a millennial borrower who closed on a home loan this summer was 723; the average FICO score of a millennial borrower who closed on a conventional loan, however, was 748. The average FICO score of a millennial borrower who closed on an FHA loan this summer was lower, at 691. The majority of millennials in Ellie Mae’s Tracker obtained a conventional loan.
“Economic uncertainty may be contributing to a general tightening of credit, which could explain why we are seeing a slight uptick in the average FICO scores for closed loans to millennials,” said Joe Tyrrell, executive vice president of Corporate Strategy at Ellie Mae, in a statement. “We also continue to see FHA loans play a significant role in helping millennials make their homeownership dreams a reality. These types of loans make up 37 percent of all closed loans to this generation, compared to just 23 percent of closed loans across all generations of homebuyers.”
FHA loans averaged 45 days to close this summer, according to the Tracker; conventional loans averaged one day less, at 44.
Source: Ellie Mae
Published with permission from RISMedia.