Category Archives: Real Estate

How does your credit score affect your mortgage rate?

Leave a reply

After a relatively calm real estate market in 2016, the housing market has been heating up in 2017. The housing market has shown signs of strength in the beginning of 2017. Trading Economics reported that sales of new single-family houses in the United States jumped 6.1% to a seasonally adjusted annual rate of 592,000 in February of 2017. It follows an upwardly revised 558,000 in the previous month, and well above market expectations of 565,000 as unusual warm weather boosted sales in the Midwest, West and the South. Confirming this trend, most real estate experts are predicting a strong year ahead for US housing in 2017, through 2018 and beyond.  However, the slowly rising mortgage rate can discourage the potential home buyers to purchase their homes and subsequently cool the housing market.  The online real estate brokerage Redfin predicts average interest rates for a 30-year fixed rate mortgage to stay below 4.3% in 2017. The National Association of Realtors (NAR) predicts a modest rise to 4.6% while Realtor.com predicts 4.5%.  Fannie Mae, the National Association of Realtors and Wells Fargo predict it will average 4.1%. Freddie Mac forecasts an average mortgage rate of 4.2% for all of 2017.  Since the November 2016 presidential election, the 30-year fixed mortgage rate has jumped more than half a percentage point to 4.3%, according to the Bloomerg.com.  On March 15th of 2017, the Federal Reserve increased its benchmark interest rate by a quarter point and signaled that it would do so two more times in 2017. Regardless of forecast variations, many forecasters believe mortgage rates above 4% are here to stay. As the mortgage rate inches up, the potential buyers are nervous about this trend and would like to find a way to lower the interest on their mortgage. Thus, the buyer’s credit score really matters. Here is the way that your credit score (in the range of 300 -850) affects your mortgage rate. For a free score, you may visit (https://www.freescoreonline.com/us/6019/373f031/t420/320/lp/320-d3a5/?sid=GNAzed00556a&id=2635&ord=5113&edata2=CTRLelmenu&append=1&ckmscn=6986185201&gclid=CMiu4LjchNMCFR2ewAodxhcCkA&c=MjYzNSA0OTU3ODg4NzcgMjUgNjAgNTExMyAxNjI3NzU2NTQ0IDA0MDEyMDE3MjI1NzAx or ;https://www.creditkarma.com/).

  • A credit score of 740 or higher qualifies you for the lowest interest rate from most lenders.
  • Though possible, it is difficult for you to get a mortgage with a credit score below 620.
  • Typically, a difference between the best and worst rates can vary by a full percentage point and a half.
  • Your credit score is influenced by the borrower’s low balance, a long history of on-time payments (e.g., for car loan, credit cards), outstanding debt relative to the total available debt, a length of the credit history, and pursuit of new credit – how many inquiries are on your credit report.
  • It is advised that, a year before buying a home, you should check your credit report and then think about ways to correct any errors in your report and improve your credit score.
  • Negative activity, such as late payments, collections and delinquent accounts, can rob you of good credit scores, cost you loan approval.
  • Creditors make mistakes and reporting errors do happen. Errors that are seemingly minor (e.g., an account that doesn’t belong to you) or serious (a false delinquency) that go undetected and undisputed can lower your credit scores. So, you need to carefully review your report with a watchful eye.
  • Lenders look at all three scores of three credit bureaus and use the middle one. The big three credit bureaus are: Equifax, Experian, and TransUnion. These bureaus are all publicly-traded, for-profit companies who are not owned by the government.
Contact Information For the Three Credit Bureaus is:
  1. Equifax – www.equifax.com. P.O. Box 740241. Atlanta, GA 30374-0241. 1-800-685-1111.
  2. Experian – www.experian.com. P.O. Box 2104. Allen, TX 75013-0949. 1-888-EXPERIAN (397-3742)
  3. TransUnion – www.transunion.com. P.O. Box 1000. Chester, PA 19022. 1-800-916-8800.