Your credit score can make or break your mortgage rate.
You see, lenders save their best homebuyer interest rates with the best credit scores. They know that people with good results are almost certain to repay their home loans in full.
In the meantime, if your credit score hovers somewhere in the 600s or below, lenders will get nervous that you will be going on bail. When they give you a loan, they usually charge you more in the form of a higher interest rate.
If you try the free mortgage search tool from Money Talks News, you can get an idea of what interest rates lenders would actually offer you based on your current creditworthiness. You can also see the interest rates that lenders would offer you with a higher score – which could save you five-figure amounts.
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Here is how. For example, suppose you buy a home for $ 300,000 and make a down payment of $ 50,000. A 30 year mortgage with a fixed rate of 4% will cost more than $ 179,000 in interest payments over the life of the loan.
However, at a rate of 5% higher by only one percentage point, you’d be spending about $ 233,000 on interest. That’s about $ 54,000 more than if you had the lower rate.
Don’t make the mistake of ignoring your creditworthiness before buying a home. If it’s stuck in the basement, you can quickly boost your credit score so you can borrow at a cheaper rate.
