Mortgage Rates & Credit Scores

Your mortgage rate is heavily influenced by your credit score. Whether you have a conforming mortgage, jumbo mortgage, or super jumbo mortgage the fact of the matter is the higher the score the better your interest rate on your loan.

During the last decade as long as you had a FICO score of 620 or greater in general everyone received the same interest rate for their mortgage. Credit was loose back then and qualifying for a mortgage was really nothing special.

After the mortgage melt-down starting in the last part of the decade credit got a lot tighter. Lenders again returned to normal underwriting guidelines.  One of the main things that they reinstated was tier-based credit scoring for interest-rates. This scoring system applies both to conforming loans, jumbo loans, and super-jumbo loans.

Conforming mortgages now give the very best interest-rate to anyone with a credit score of 760 and higher. Any lower score will carry a correspondingly higher-interest rate. The tiers are based on twenty point increments: 759-740, 739-720, 719-700, 699-680, 679-660, 659-640, and 639-620.

The difference between the very best score and the lowest qualifying score is significant. On average you will pay one-half percent more in rate if you have the lower rate.

The same applies for jumbo loans though the scale doesn’t go down as far. On a jumbo loan you get the very best rate with a 750 FICO or credit score with a correspondingly higher rate as your score drops. Generally the next tiers are as follows: 749-720, 719-700, and 699-680.

Very few jumbo lenders will accept anything lower than a 680 credit score. Again expect a difference of about a half a point difference between the very best rate and the minimum rate.

Super-Jumbo lenders are even more restrictive. Almost all super-jumbo loans will require a minimum 720 credit score to obtain the loan. There is usually a quarter to a half a point difference between the minimum score of 720 and the best score of 750+

As you can see having good credit today is more important than ever. The best thing to do is to have a loan consultant or mortgage banker pull your credit prior to buying a new home and make sure that your scores are good or see if they need to be improved. Over time that higher rate will cost your thousands in interest and payments.

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