Mortgage Scoring Facts

One Point Could Save You Thousands on Your Next Mortgage or Refinance

When you apply for a home loan or refinance, one of the first things that typically occurs is your mortgage professional runs your credit report and FICO® scores. It’s important to understand that you have three separate FICO® scores (one for each repository – Experian, Trans Union and Equifax.) Your three FICO® scores are almost always different, it’s very common to have a 20+ point difference between your scores.  These scores largely determine your loan eligibility, lending parameters such as LTV (loan to value ratio which limits how much money you can borrow) and costs including interest rate and fees.

Most lenders use your middle FICO® score when determining your loan eligibility and costs. Even the smallest difference in your credit scores can have a dramatic impact on the cost of your home loan. If your existing middle FICO® score is as little as one point below the minimum requirement, you can be forced into a lower loan program involving higher fees and interest rates.

Examples of the impact your FICO® score has on a $300,000 - 30 year, fixed-rate mortgage.

        FICO® score                       APR               Monthly payment *
720+  4.77%   $1,570
680-719  4.954%   $1,602
660-679  5.168%   $1,641
640-659  5.598%   $1,722
620-639  6.144%   $1,827

Let’s assume your current scores are, Experian® – 660, Trans Union® – 659, Equifax®– 655

In this example, your highest score is 660, but because your middle score is 659, you will be forced into a loan, at considerably higher costs. In this case, you would be paying thousands of dollars more for your mortgage because of a single FICO® point.

If your existing FICO® score is within 10 points of a program minimum, there’s a great chance that a mortgage professional qualified in credit rescoring canide a better choice including optimal terms and interest rate, potentially allowing you to borrow more and save tens of thousands of dollars.

*The terms and rates portrayed are for illustrative purposes only and do not reflect any specific lending program.*
*FICO® is a registered trademark of the Fair Isaac Company.*

In addition to lowering your costs, the higher your FICO® score, the easier the lending process is, with faster approvals and closings requiring less documentation.

Knowledge is The Key

There are easy solutions available that can increase your FICO® scores, allowing you to qualify for the best lending program possible. In many cases it can be as simple as a single phone call. Your loan officer should be able to explain your FICO® scores, identify opportunities to obtain better rates and terms and provide you the exact steps required to improve your score (usually within 72 hours.)

Get a List of Certified Mortgage Professionals in Your Area

If you’re searching for the best mortgage possible or would like a second opinion on a existing mortgage offer, we can provide you a list of mortgage professionals in your area that can make sure you’re qualifying for the best loan possible. Send us an email, be sure to include you name and address. We’ll respond with a list of certified mortgage professionals in your area that can assist you. You can also give us a call during normal business hours at 800.473.1380. 

If you’re already working with a broker or lender that does not have access to Credit Technologies, have your mortgage professional call 800.445.4922 – we’ll work with your chosen professional to get you the best loan available.

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