How FICO Score affects Mortgage Rate

How FICO Score Affects Mortgage Rate

Absolute_Mortgage (Photo credit: kathleenleavitt)

How FICO Score Affects Mortgage Rate

A lot of factors go into whether or not you get approved for a mortgage  If you do get a mortgage your lender’s assessment of your loan application needs to show that you have passed certain standards. How FICO score affects mortgage rate is shown below. The weight given to various elements of your application will vary from lender to lender but all lenders want to see:

  • Sufficient income from a steady and stable source
  • An appraisal  greater than the value of the mortgage you seek
  • A sizable down payment of at least 20%.  This has become more lenient in recent times but a sizable down payment covers a lot of sins.
  • Sufficient cash on hand to pay closing costs

Here are Specifics on How FICO Score Affects Mortgage Rate

Fannie Mae and Freddie Mac will not touch a mortgage for an applicant who does not have a FICO score of at least 620.  For a 30 year fixed mortgage of $150,000.00 here’s what you can expect for interest rates at the various FICO cut off levels. Interest rates are subject to change at any time.  Relatively speaking the percentage doesn’t vary too much from what you see below. This is how FICO score affects mortgage rates.

  1. 620-639…………………..4.47%
  2. 640-659…………………..3.932%
  3. 660-679…………………..3.502%
  4. 680-699…………………..3.288%
  5. 700-759…………………..3.111%
  6. 760-850…………………..2.889%

Over the lifetime of the mortgage you will pay $74,446.00 in interest for the best rate.  For the worst rate you will pay $122,905.00 in interest.  The difference is $49,459.00!.  Even figuring the difference between the best rate and the next best rate you will see a difference of $6,000.00 over the loan’s lifetime.

I’m here to help you understand how to improve your FICO score by understanding how the system works.  Stay on top of the situation regarding your credit score and you will reap many rewards.You can make a dramatic and immediate change in your score by paying down revolving debt on your credit cards.  Your debt to available credit ratio is the area in which you have the most immediate control.

Enhanced by Zemanta
The following two tabs change content below.
After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

Latest posts by Edward St. Onge (see all)