Have you shopped around or made a few calls to get the best mortgage rate pricing? Mortgage rate pricing can change slightly from lender to lender depending on many factors. Some if not most factors when considering interest rates cannot be changed by the borrower. Having made that statement or claim a borrower can prepare ahead and accomplish maximum results towards best mortgage rate pricing. A borrower can get the better mortgage rates and terms with good planning and also maximize their return on investment. Make no mistake, historically in America, home ownership is an investment financially and personal gain. When a lender loans money there is a risk and of course the lender wants assurance the money loan will be paid back, it is a statistical fact borrowers with more of their own money/equity in their home are a better risk than those who cannot or do not have much equity. This means the more down payment applied to the purchase of a home reduces the risk for a lender. Best Mortgage pricing begins when a borrower has 20% or more down payment. If there is less than this amount there is very little a borrower can do to adjust the mortgage rates pricing. FICO credit scores will have impact on the mortgage rates a borrower will get. There are big pricing adjustments on conventional loans for borrowers with FICO scores less than 700. A borrower’s FICO credit scores play a major role in Loan Level Pricing Adjustment system. Lenders have mortgage rates credit score charts, for example. An absolute perfect FICO credit score is 850, however to get the best conventional mortgage rates you will need a 740 FICO credit score. A borrower will have to accept pricing adjustments (higher rates) less than 740. There will be pricing adjustments on loan to value, as mentioned earlier there is more risk to the borrower when they have more skin in the game. A borrower with 20% or more down payment will receive best mortgage pricing. There are pricing adjustments on occupancy types, type of property, loan amount, number of units, cash out refinancing, subordinating a second mortgage, loan to value and of course FICO Credit Scores. A person that has credit scores of 740 or higher will not take a pricing hit but if there is a pricing hit for other items and you have lower FICO credit scores your mortgage rates will be higher. You would then be taking a hit on pricing for lower credit scores. Planning ahead really helps, consult with a Loan Officer if you plan on buying in the near future. The Larry Stepp Team can look at your credit report and apply a credit analyzer and advise where you can achieve maximum score results. I am sure there are other Loan Originators or Brokers that can do the same however we will work with you and spend the necessary time to get you to your goal.
There is a few behaviors that will boost your FICO credit scores, to do boost them quickly is hard to say, sometimes it may take a few weeks to a few months. Again, once you begin to consider a home purchase consult with a lender or mortgage loan officer and they can often provide you with scores and direction. Realize best mortgage rate pricing is best planned, it doesn’t just happen. FICO credit scores begin at 300 all the way to 850, don’t spend too much effort trying to reach 850, not only is it complicated but most anything you will ever want to accomplish with credit can be done with a FICO score of 720. When a borrower is applying for a mortgage, once they hit a range of scores it will not matter how much above that range their credit scores are. When qualifying for a mortgage all three credit scores are pulled from the big three credit reporting agencies, TransUnion, Experian and Equifax. The score that is used the middle credit score, if there are two borrowers in the purchase the lower of the two middle credit scores will be used for qualifying. An example of why an 800 FICO score will not provide for any better mortgage rate pricing is because the rate from 740 and above is the same. The impact would be seen if the FICO score was below 740. A couple of easy things to remember for improved credit scores. Any revolving credit or credit card you hold will report positively for the consumer if the credit used is 10%, no more than 20% of the maximum credit. If you have a $5,000 credit line and are using $4990 of it, this will bring FICO scores down. The opposite can occur if you NEVER use the credit card, keep a small $10,00 to $20.00 balance and pay it monthly and keep it reporting. Most of the clients I have met that have credit card lines at their maximum will often have FICO scores 640 or below. When purchasing a home a FICO score of 640 will get a much higher mortgage interest rate than a mortgage applicant with a 740 FICO credit score. The Larry Stepp Team at Gustan Cho Associates is available for your assistance and guidance 7 days a week, holidays and weekends.
Larry Stepp 407-922-4755 LarryS.HomesNetwork@gmail.com