Paying attention to your credit score today can save you thousand of dollars on your next mortgage transaction. Fannie Mae recently updated their Loan Level Price Adjustments (used to determine the final mortgage rate) and increased mortgage costs for most borrowers.
How to read this chart?
Step 1 What is your middle credit score? If you are married or applying jointly with another party, what is the lowest of the two middle scores?
Step 2 What is the loan to value ratio? Are you putting down 5%, 10% or 20% down? ex. 5% down would put you in the 90.01-95.00 bracket
Step 3 Is the additional fee you pay when pricing out a mortgage today.
* It gets even more expensive, when you do a cash out refinance, buy a multifamily or investment property.
As you can see the difference between 1 credit score point can be costly. I'm using the 75.01-80% LTV column for this example.
679 v 680 = .875% higher cost
200,000 loan * .875% = $1,750 higher cost
699 v 700 = .75% higher cost
200,000 * .75% = $1,500 higher cost
719 v 720 = .5% higher cost
200,000 * .50% = $1,000 higher cost
Click Here for an article from MyFico.com to improve your credit score.
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