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  • Your Credit Score Impacts Your Mortgage Rate?

    Your credit score impacts your mortgage rate substantially. Whenever someone applies for a mortgage, their credit score is a main focus. Lenders are looking at your score as they prepare to offer you an interest rate. If you have a high credit score, it’s likely you’ll secure a lower rate. If you have a poor credit score, that’s a different story.

    You certainly want the best rate. Those usually come with excellent credit scores, though. Even if you have “good” credit, that might mean tens of thousands of interest dollars more when you examine the overall life of your loan. Today, we’ll briefly discuss how mortgage rates work. We’ll also look at how important it is to improve your credit score before you apply.

    Buying a New Home?

    Before you begin shopping for houses, check your credit score. Your best bet is to purchase your FICO scores. You’ll need to pull three reports, especially if you don’t know which agency your lender plans on using. These come from the three major credit bureaus: Equifax, Experian, and TransUnion.

    That’s actually part of our aggressive credit repair here at White, Jacobs & Associates (WJA). We pull a FICO tri-merge to indicate exactly what’s reporting at each of the bureaus.

    Credit Score Impacts Your Mortgage Rate

    What Your Score Means

    Think about your lender. The bank is deciding to lend you money for 30 years. Though you have your down payment ready and your income is steady, things could change. Things do change. They know that. You might find yourself in hard times, or you could switch jobs.

    Your credit score gives lenders a necessary picture of you. They understand the likelihood of you making payments based on your debt and payment history. And this glimpse into your financial character and that level of responsibility is important to them.

    How Does Your Credit Score Impact Your Mortgage Rate – High vs. Low Credit Scores

    If you have a higher score, you’ll build equity in your home at a lower cost. If you’ve got a low score, you’ll see higher monthly payments. As you pay more in total payments (than someone with a higher credit score), you’ll pay off significantly less principal early on.

    Increasing your score can actually have a huge impact on your mortgage rate. Even a few points more can send you to the next level with lower rates. It can save you thousands in the long term.

    The Value of a Mortgage History

    When you purchase your home, expect to see your credit score decrease. It’s the largest loan you’ll likely ever take out, so wait about 6 months before you go for any other sizable loans. Make on-time, in-full payments every single month. This will bring your score back up. Your credit score naturally rises if you show that you are a responsible borrower.

    If your credit report holds nothing but credit card loans, your score won’t be as high. But when you have a mortgage and make timely payments, you’ll see an increase. You’ll be rewarded.

    How Can You Boost Your Credit Score? Higher Credit Score Means Better Mortgage Rate!

    Here are five quick tips:
    1. Correct any errors on your credit report.
    2. Get your credit card balances down (below 30% of your max limit).
    3. Pay all of your bills on time.
    4. If you pay an older credit line off, don’t close it immediately.
    5. Do not take out large loans or open new lines of credit as you prepare to purchase a home.

    We’re Here to Help

    Reach out to us at WJA today. We’ll let you know if you’re a good fit for our aggressive attorney-backed program. Our clients typically see results in as little as 30-45 days. Some are even through the program with a new credit score in 90 days. Take advantage of our no-cost consultation, and take the first step in securing the absolute best mortgage rate possible for you.