How The FICO Score Affects Mortgage Rates & Payments

What Mortgage Rates Expected For Your FICO Score

Some people do not grasp the immense importance of raising their FICO score!

Having a higher score means saving thousands of dollars monthly on all your credit and mortgage payments.

Getting your FICO score rebuild may take some time and efforts, but it is financially smart that you need to be totally blind or helpless to continue having a low FICO credit score and pay so much money on interest rates, and do nothing about it!

What A Higher Score Can Do For You

Having a higher FICO score means you will be getting better interest rates from lenders, banks and credit companies. This means the money you ‘buy’ from them will be significantly ‘cheaper’. If you drive to the other side of town to buy at a cheap Walmart or some other budget store, why don’t you invest some effort and ‘buy’ cheaper money that you are paying such expensive price for every month?

What Interest Rates To Expect With Your FICO score

Banks and lenders are lending you their money for a monthly fee (interest rate), if you have a poor credit FICO score, then their money is at risk and the price gets higher (higher rates). If you have a poor credit score, the lenders know less lending institutes will be willing to lend you money (you are too risky for them) thus they can raise their price even more, as you have less options to choose from..

Low Score = Higher Monthly Payments

If you and your friend buy the same property and get the same $300,000 mortgage on the same home, but his FICO score is better (higher) you will be paying much more every month and a zillion more over the home mortgage life time!

How Much Money Your FICO Score Is Worth

The following data (from MyFICO.com) is for a $300,000 home mortgage loan, for 30 years. Here is the average rates you can expect to get relaying on your current FICO score.

Have a FICO score of 760-850 – This is a very good score, it is actually the best possible position when coming to request a mortgage, as the lender knows you are a good costumer, and pose no risk, the chances you will pay back the loan are very good. The lenders will offer 4.457% interest rate, which means you will have a monthly payment of $1,512.

Have a 700-759 credit score? This is also a very good credit score, the rule of thumb is that ‘anything above 700’ is O.K. The bank knows you are a reliable customer (above national average) and will offer you a home loan rate of 4.679%, which means $1,552 in the monthly payments.

This FICO score – 680-699  – Is the national average credit score. It is a good thing that you are like everyone else.. but take in mind that 58% of the people have a score higher than 700! So if your score is lower, than you belong to the more risky part of the customers. You are not an immediate threat to the lenders and they may offer an interstate for your mortgage of 4.856%.

You will be paying $1,584 per month. You can be saving $72 each month (only on the mortgage payments) if you had a better FICO score, thats $25,920 wasted… just because of your current credit score isn’t high enough. See this Credit Repair Software ($97) to raise your score.

Is your current FICO score 660-679? Well if your answer is yes, than you belong to the low part of the chart, but you are lucky! You have the best chances to improve your FICO score. By the lenders point of view you are a financial riddle, your score is low but not too low, to deny you a loan, so they will place an expensive price tag on your mortgage rate – 5.070%. This sums to a monthly payment of $1,623.

Getting your credit score higher by only 30 points will save you too $25,560 over 30 years, can you think of other things to do with $25,000 ? Your best investment would be getting simple education from the recommended Credit Repair University Program, you will have to invest less than $50 (one time fee) to get the no-brainers “tricks and tips” but the alternative is worse..

You are probably paying more than that each month to some greedy credit company, and paying to others to repair the score for you will cost $500+ so do your math .. don’t be cheap where financial education is required.

Having a 640-659 FICO score – This is a very low score, this means you have bad credit and do not pay your bills, or debts. If you were the lender, would you give yourself $300,000 as a home mortgage? Humm ?

Because the risk of not being paid back on time, or having to chase their money, the enders will place a high interest rate on your 30 year mortgage of about 5.500% ! You will be paying $1,703 each month to pay this mortgage back.

If your FICO score would be raised by 40-50 points, you will be saving $151 each month, or $1812 each year (like having one month mortgage free) and in the overall mortgage life term – you will save $54,360! Do you have enough money to waste $54,360 just because of bad credit?

If your score is below 700, you might want to do something about it – get this Credit Repair University’ which will save you money and time.

If this is your score: 620-639, then you are in some financial mess, most of the lenders may think twice before approving you a $300,000 mortgage. There is a reason why your score is so low, and the lenders see this score and ‘smell trouble’. The mortgage rates for a 30 year may be 6.046%, which means you will be paying more to get a mortgage than others with a better score than you.

If your financial position is not that stable then paying a monthly mortgage of $1,808 surly will not be easy for you. Even though your score is low, it is not hopeless! It may be that with a few tweaks you may raise it by 20-30 points and you will be immediately saving thousands on lower interest rates.

A raise of 30 points will save you $185 per month! Every month. Do you have other plans for $185? What can you do with an extra $2200 which you will be leaving in your pocket every year? Can you repair your credit by 30 points? Why not!? Others are doing it, so you can too.

If you rebuild your credit by ‘only’ 20 points you will still be saving $105 per month… If you have no clue where to start take this program (Credit Repair University) to follow you through step by step.

Have a FICO score lower than 619? Than you need to first raise your score, buy fixing what ever shows on your credit report. Your process may take longer time and will need some change in your credit and household behaviors. People with low credit score like yours managed to pull out from this financial pit.

The Credit Repair University may be a good place to start.