Don’t take your credit score for granted, a FICO 700 score means a lot when applying for a mortgage.  As a matter of fact, it means “everything.”

A credit score that is in the 700’s will always get you a lower interest rate, whereas, a lower credit score will reap a higher credit score.  Why?  Because lenders view your high credit profile as a lower risk to their portfolios…..which means they have a better chance of selling your loan.  Does that make sense?

Maybe not to you, but since they have the “gold” so to speak, they shall rule.   Certainly you have heard the old saying “he who has the gold, shall rule.”

And let me tell you…..they certainly rule.  Don’t forget, lenders are in the business to make a profit and everytime they sell their loans they need loan packages with borrowers that are low credit risks.  That’s what sells.

Therefore, you will need to have a high credit score of 700+ to get a lower interest rate.

Higher credit scores will always mean a lower interest rate, don’t forget this very important tip.

Needless to say, your closing costs will even be more expensive if you have a low credit score.  What’s a low credit score you ask?  Any score below 680 is not “too hot.”   Usually this means they will add extra points to the loan and/or the closing costs.

FICO 700 SCORE MORTGAGENot very many people have a 20% down payment if they’re first-time homebuyers, therefore, they will usually be impacted by a slightly higher rate and/or possibly higher closing costs.Other factors that impact your interest rate are the down payment.  The larger your down payment, let’s say 20% down payment, the lower your interest rate.  Conversely, the lower the down payment, let’s say, 5%, the higher the interest rate.

Another factor that will have an impact on your interest rate is the loan program.  For example, a 30 year conventional loan will usually have the best and current interest rates whereas a FHA or VA loan program (government loan) will have a slightly higher rate as well as costs (however, sometimes those rates can vary from lender to lender).

Adjustable rate mortgage loans (aka ARM) will have a lower interest rate but the terms of the loan are usually shorter, such as 3, 5, 7, 10 year loan.  A 15 year fixed rate mortgage loans will always have a lower interest rate.

+Given the above information and considering that you may be planning to purchase a home in the near future, may I suggest that you work on improving your credit score if it is not 700+.

Consider paying some of your credit cards down or off.  If you have installment loans, such as, cars, boats, student loans etc.  you may want to pay these in full.  Derogatory credit will have a serious impact on your credit score, be sure to resolve these issues prior to applying for a home loan.

Check your credit score regularly so that you know exactly where you stand.  Stay on top of outdated and inaccurate information to improve your score.  Please view the video above (from Federal Trade Commission FTC) for more information.


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