Gene Mundt, Chicago Mortgage Originator is always a mine of information re the mortgage industry. Here is information on the importance of maintaining a good credit score.
Most of the loan applicants I work with come to me already aware of the fact that their credit scores and credit history contribute to and affect the interest rate quote they will receive upon application for a mortgage …
But beyond that, what they know of the actual contribution of the two to the “fate and rate” of their loan is typically pretty limited.
That’s understandable …
are examples of those types of loans that are NOT as sensitive to credit score levels as say … Conventional Loans. As always, there are pros and cons to consider prior to using any type of loan, and that remains true with these loans offering more credit leniency.
The advantage of choosing one of these loans for your home financing is …
Because these loans have guidelines that are a bit more “forgiving” and lenient, many hopeful home buyers find themselves able to buy and finance a home more easily (or sooner) than they previously thought possible. With housing prices currently on the rise and saving money for a down payment remaining a challenge, these types of loans can also serve as a huge advantage for some home buyers … especially first-time buyers.
- MOST Conventional Loan Programs have a “minimum” credit score. You must have that minimum score (or better) to even have a chance to qualify for mortgage approval
- MOST Conventional Loan Programs have “stepped” pricing tied to incremental differences in credit scores.
A. That means anyone with a lower credit score pays a higher interest rate. Conversely, those with a higher credit score earn a lower interest rate.
- MOST Lenders use the “middle” score of the 3 major Credit Bureau scores pulled for a Residential Mortgage Request. (Each Credit Bureau provides one credit score)
- When placing LESS than a 20% down payment on a home, MOST Private Mortgage Insurance Companies charge borrowers differently … and that charge is reliant on credit scores and credit score variances in categories of20 point increments (in MOST cases)
Note that pesky word “MOST”? I refer you back to the moving parts and asterisks I spoke about above. Exceptions to the rule do exist.
There are many factors that enter into the interest rate earned and the monthly mortgage payments you’ll make. These factors are also the basis for many other things such as the Closing Costs you pay, the loan program you qualify for, which loan program will serve your needs best … and yes, even if you receive mortgage approval.
- These “factors” are personal to you and you alone
- No comparisons of your loan, interest rate, etc. can or should be made between you and anyone else
- Your personal factors, over time, can change or be changed