Your overall FICO score will determine what kind of rates you will get from your lender. Your FICI score applies to all loans – personal, car, boat, and home. The higher your score, the more favorable your interest rates will be.

Your FICO score is determined by these 5 factors:

Payment History (35%) – If you always pay your debts on time and have no bankruptcies this is a positive.

Total Amount of Debt (30%) – This is the measure of all the accounts that you have open. FICO also measures the amount of credit you have available vs. the amount you are using and factors that in here. For example, if you have $20,000 available on a credit card, but only have an outstanding balance of $200 this is obviously much better than being maxed out at the full $20,000.

Credit History (15%) – A longer credit history is generally better, but if the rest of your credit report is good, you can still get a good FICO score.

New Credit (10%) – Showing a sudden increase in seeking new credit may lower your score. When a bank runs your credit history this may very well impact your score by up to 5 points. But FICO takes into consideration multiple applications for a specific loan. For example, if you are shopping around for a more competitive house loan rate and you have your credit checked by multiple lenders. However, it is advised to get these multiple checks done in a condensed time frame, like a 30 day period, so that FICO can clearly see your intensions and so your score doesn’t become adversely affected.

Other Consideration (10%) – With a longer credit history, it is considered good to have diversity in your debt. It would be a plus to have a mix of credit card debt, car loans, property loans and personal loans.

1. More mobility. This is especially true in depressed market conditions like where experiencing right now. If you are living in a depressed market like Detroit and  need to move to get a job, good luck selling or renting your house to recoup your losses. In a bad job market, flexibility is key.

2. Depreciation. With all the uncertainty in the housing market today it may be better to wait. It’s impossible to time the housing market so that you buy at the exact bottom and once the market does hit bottom, you’ll have plenty of time to buy so why rush in. It’s better to buy once things have stabilized and so far that doesn’t seem to have happened yet.

3. Owning a House is more Stressful. This may seem like a weird thing to consider but it’s simply true. Owning a home has a lot more responsibility tied to it than renting does, some people are up to the responsibility some people aren’t. If your house needs a new roof, you better come up with the cash. If your air conditioner breaks in the middle of summer, hope you have a couple extra grand sitting around. Who doesn’t love mowing the law? The responsibilities of home ownership are endless.

4. Liquidity. Right now as unemployment is rising, housing is falling and the economy is still in turmoil, cash is king. If you tie up your money in a house, this is money you may not have for an emergency job loss or forced move.

5. Neighborhood deterioration. This is generally related to both 1 and 2 above, if you have the misfortune to buy in an area where there are no longer any jobs, people move out and vacant/foreclosed houses abound. Even if you manage to keep your job and pay your mortgage, your house has lost value and so has your entire neighborhood. In some cases entire cities are losing value. No one wants to live where there is no opportunity and no perceived value even if housing is cheap.