Good credit scores have just become even more important to getting a competitive interest rate on your next mortgage.
--------------------------------------------------
Dear BuildingCredibility.com reader:
I’m sure you’ve all heard in some way, shape, or form, that mortgage lending guidelines have gotten tighter over the last year. You no doubt heard this from multiple sources, such as national newscasts, your local newspaper, or even your friends or family who recently applied and were rejected for a mortgage they applied for.
However, what you may not have heard, was about the new interest rate hikes that have been implemented for borrowers with average credit scores. I’m not talking about subprime borrowers with sub-600 credit scores or recent bankruptcies or foreclosures; I’m talking about borrowers with credit scores ranging anywhere from 620-679; a range that many previously thought consisted of “good credit scores.”
Although the actual interest rate a borrower qualifies for will vary from lender to lender, and depends on many other factors outside of credit score, I have broken down how much your interest rate will approximately be affected by having a credit score in the 620-679 range:
620-639 -- approximately .875%--1% higher interest rate
640-659 -- approximately .75%--.875% higher interest rate
660-679 -- approximately .375%--.5% higher interest rate
These new rate adjustments will not affect qualified borrowers with credit scores 680 or higher, and do not affect 15 year fixed mortgage products for most lenders.
In short, if you are considering a purchase or a refinance in 2008, it would be very wise to get your credit scores and report checked prior to submitting a loan application. If the scores are anywhere less than 680, it is imperative that you work with your lender or a credit repair company to help get the credit scores above 680.
Regards,