Without a high credit score, you won’t qualify for the best mortgage rates available, which could mean you’ll end up paying more money over the term of your mortgage. Even with rates at historic lows right now, the difference between 3.5% and 3.75% can add up, especially if you’re applying for a 30-year fixed-rate mortgage.
Along with a low debt-to-income ratio and a strong financial history, a high credit score gets you a low mortgage rate. But why?
Lenders want to loan to people who have a record of on-time payments to creditors.
“If somebody has a high credit score, what that shows us is that they’ve been good on meeting their obligations, whether it be credit cards, car loans or other home loans in the past,” says Brian Hoovler, a loan production partner with Peoples Home Equity in San Francisco. “It means we’re more likely to want to give you a loan because we know you’re going to pay us back.” Read Full Article…