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Mortgage lenders check your credit history before approving a home-buying loan. Your credit scores are crucial to getting the amount you want to borrow at a good interest rate.  

Your income vs. your debt, your payment history, the length of time you’ve had credit, new credit you’ve opened, and the types of credit you owe (such as student loans or consumer debt) are all calculated in a valuation system known as credit or FICO scores.

FICO scores range from 300 to 850, but because mortgage loans are so large and have such a long payback period, most lenders require scores between 520 to 700 and above, depending on the type of loan.

“Conforming” loans are guaranteed by the federal government, including FHA or VA loans. They require a minimum score of 500 to 520 and any scores lower than 580 will increase the minimum down- payment required to 10%. If you’re married or have a co-borrower, their scores must meet the same requirements.  All FHA loans require private mortgage insurance, which reduces the amount you can borrow.

“Conventional” loans are federally sponsored by Fannie Mae or Freddie Mac to be packaged into securities bundles and sold on the secondary market. Lenders can manage risk by requiring scores of 700 and above, using loan-level price adjustments, based on loan-to-value ratios and credit scores.

For any loan, the larger your down- payment, the lower your credit score can be. Credit scores also impact interest rates. The better the score, the better the rate.

California real estate professionals were the first to introduce a concept called value-range pricing, also known as variable pricing or range pricing. Instead of one listing price, the seller can list a pricing range and deepen the pool of buyers who may be interested in the home.

The advantages are many. Some sellers are more comfortable using a price range for their home, rather than a specific price that feels too high or too low. The seller’s home appears in a broader number of results when a real estate professional or a buyer searches for homes online. Homebuyers shop in a range because they want to see the best homes available that they can possibly afford.

Getting as many buyers as possible to look at the home is crucial for sellers. If a buyer’s search parameters are limited to between $300,000 and $330,000, they won’t see the home that’s listed for $335,000. The value range selected by the seller may be $325,000 to $350,000, which would put the home in front of the $330,000 buyer.

There are some drawbacks to value-range pricing. It can impact comparisons, because MLSs that employ it tend to use the upper end of the price to create reports, which can skew the results upward. These reports are passed to consumers, who may not understand what value-range pricing is. 

If you’re a seller, ask your real estate professional if value-range pricing is an option in your area and if it’s appropriate for your home.