HOW YOUR CREDIT SCORE AFFECTS YOUR MORTGAGE RATE.
Credit cards came as a way to help people get stuff fast and easy, although the debt obtained by their usage can generate certain uncomfortable situations at the moment of fulfilling the payments. So depending on how you pay your debts on time is going to be record in your debt historical record and that will be very helpful in the future; especially when it is related to mortgages.
In case you are in need of a Sunwest Mortgage, you will need to find out certain aspects that are going to be useful at the moment of asking for one and what the percentage to pay for it would be (you can estimate your payment with the online payment calculator). And some of the factors that will be required for the lowest mortgage rates are a high credit score, a low debt-to-income ratio, and a strong financial. These three factors would be an great lever to access mortgage with a low interest rate in case of needing it.
If a person has shown a high credit score, fulfilling with their obligations on time, the chances to get money from banks or other credit institutions are higher than someone who has not done things correctly, monetarily speaking. So, if in the past debts relate to cars, home, or credit cards reflect a historical record of on date payment basis is more likely that any monetary institution would be eager to lend you the money required because your background shows a high possibility that those institutions are going to get their money back for sure.
But that is just part of the package to get a good mortgage, beside a high credit score you need to complete it with information about your income and assets you possess.
To calculate your credit score, companies related to the field used the FICO score model – a three digit number that show your ability to pay on time. Once all the factors are taken into account, the steps to get a good low rate mortgage are going to be easy to take.
The chances of getting pretty good interest rate are higher if you get a score of 700-plus. Although you can get certain loans for scores under 680, the 700s are the best numbers to wish for the lowest rates. Being lower than 649, troubles will arise at the moment of asking for a SunWest Mortgage form, or a form any bank or online lender. To be in the excellent positon territory, a score of more than 720 would be required by most of the lender institutions.
The loaners industry sets the credit score scale into 20-points increments and adjusts the rates it offers their clients every time a credit score moves up or down by about 20 points. For instance, if your score goes from 760 to 740, you are most likely to see a small increase in the rate being offered. This loan-level pricing is going to be adjust any time your score go down a level and the cost will increase for every 20 points reduction.
This different rate payment will be marked but even a difference of a 100-point in credit score. For example, a 780 FICO credit score would provide a 3.875% rate form a 30-year-fixed-rate of $240,000 with $1,129 monthly payment not include taxes, insurance or homeowners association fees. With a 100-point score difference, the same loan would get a rate of 4.125% translate it into an amount of $1,163, an extra $34 monthly, or $408 yearly.
At first glance, the difference of rate seems not relevant, but within the years, the 100-point difference forces the debtor to pay a $12,240 over the 30 year term of the loan.
Although high credit score are ideal to get low rate mortgage, there some loans that can be gotten without a high level of credit numbers. In this area, conventional loans are available for those people who don’t have a high credit level in their records. Some of these conventional loans would require lower than 700 points, and even some of them would be granted with a 500 score point, especially those loans offered to US veterans, active-duty personnel and certain surviving spouses.
So if you are not qualified to any of these conventional loans, it is necessary to get a high credit score as an asset needed to get the best low rate mortgage. The ideal way to get a very good credit score is following the next recommendations:
- Make payments on time, including rent, credit cars and car loans.
- Keep your spending not bigger than the 30% of your limit on credit cards.
- Pay down high-balance credit cards and consider balance transfers to free up credit.
- Check any errors on your credit report and try to fix them as soon as possible.
- Shop for mortgage rates within a 30-day period. Too many long term inquires can lower your score.
- Look for the advice of a credit counselor or a lender to build your credit.