How Does My Credit Score Affect My Mortgage Rate?

This is a common question especially among first time homebuyers, and it is one that deserves a good explanation. A lot of people are surprised when they learn that they do not qualify for a mortgage loan at the low mortgage rates that are being promoted on television commercials and that may lead them to think they are being taken advantage of. The truth is – in most cases at least – far less sinister but no less upsetting.

When your mortgage loan application is completed it is sent next to an Underwriter who carefully examines all of the paperwork. It is the underwriter’s job to determine your credit worthiness and they consider a number of factors during this stage of the process. Your financial situation plays a large role here as does your job, your income and your time at that job. Underwriters look at your financial history as well, including the average balance you have kept in savings and checking accounts and other assets you might be holding.

One of the pivot points for most underwriting scenarios is when your credit report is pulled and examined. There are some companies and underwriters that will look at the credit score alone. If it does not meet certain predetermined criteria then your loan application will be denied or you will not qualify for as enticing a loan rate. The easiest way to look at it is this: the lower your credit score, the higher your mortgage loan rate is likely to be. This is because a lower credit score is looked on as an increased credit risk and with increased risk comes higher interest rates.

Less than Perfect Credit? There is Hope!

Knowing what you are dealing with is half the battle but even if there are a few dings on your report you don’t have to give up hope. Let’s face it few of us have a perfect credit history. That doesn’t necessarily mean you have to give up your dream of purchasing a new home. The staff at Wyndham Capital understands that bad things can happen to hard working people and we will work with you to do everything possible to find a mortgage loan product that will fit your needs without depleting your whole budget.

A lot of people get worried about their credit history without even knowing what is in it! If you aren’t sure what might be in your credit report there is a simple free way to find out. Federal law requires that you are allowed one free copy of your credit report every year but don’t be taken in by the television commercials that advertise as “free credit reports” and then try to sell you a monthly credit monitoring service. To get your free report simply go to annualcreditreport.com to get started.

Give us a call at Wyndham Capital Mortgage today and find out what our team of mortgage professionals can do for you!

By: Mark Wyndham

Wyndham Capital Article Source: Wyndham Capital Mortgage blog

Tags: Affect, Credit, Mortgage, Rate, Score