When higher is lower... A word about credit scores.

Real Estate Agent with Roy Wheeler Realty Co.

2010 sales price graph charlottesville va real estateDid you happen to see the year-end graph concerning Charlottesville-area home prices? (CAAR 2010 Year-end Real Estate Market Report)

Well, It's time.  If a new home has been in your thoughts, now is the time to do something about it.  If you've been waiting for the market to bottom-out, it's here.  This isn't Realtor-Speak, this is my telling anyone who will listen... If you are in the market for a home in the Charlottesville area, and you want to get the best deal possible, you don't want to wait until next year.

The very first action on any buyer's list of to-do's is : Pull your credit report and get a pre-approval letter from your lender of choice.  (I work with some great lenders, and your pre-approval letter does not have to cost you money.)  When the lender pulls your credit report, he’ll get your credit score, and this number is going to determine what interest rate you will enjoy for the next thirty years.

When Higher is Lower

Most lenders quote rates based on the best credit score.  Buyers need to know their credit score before writing a contract to buy a home so they'll have a realistic idea of what their payment will be.   If a buyer has a lower than "A" credit score, the rate goes up in increments that could dramatically affect the payments.

There is an inverse relationship between the credit score and the interest rate charged.  The higher the score, the lower the rate will be.  Let's say a lender quotes their best rate for a credit score of 760-850.  However, this lender's minimum acceptable score of 620-639 would have to pay 1.5% higher interest.  That is nearly a difference of  $200 a month!.  It is critical to know your credit score before you make a decision to buy a home.

ration credit scores to interest rate

Your first logical step is to get pre-approved with a mortgage lender, prior to looking at homes.  This gives you the confidence of knowing how much mortgage is available and if you can expect the best interest rate which will lower your payment.  Other benefits include bargaining power, quicker closing and the chance to discover any issues on your credit report that need to be corrected before going on contract.

This article, "When Higher is Lower" is based on an article of the same title, which was © 2010 Pat Zaby, Dallas, TX in November 2010. | Virginia Gardner, www.CharlottesvilleHOME.com, www.EarlysvilleHOMES.com, and www.CharlottesvilleTALK.com have permission to reprint this article.


Other good reads if you're beginning the house-hunting process:

A quick refresher: Intial steps in the home-buying process


Re-Blogged 1 time:

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Linda Graves Arnold
Coldwell Banker Gundaker-St. Louis, MO - Chesterfield, MO
St. Louis Real Estate Pro - 314-422-2762 - Referr

VIrginia, Your graph is a very compelling visual as a call to action for buyers.  Here's to your success in 2011.

Jan 29, 2011 06:56 AM #1
Virginia Gardner
Roy Wheeler Realty Co. - Charlottesville, VA
Realtor, Charlottesville, Serving Central Virginia

Thank you Jim and Linda, I hope whoever sees it will heed it!  I've been looking for a good place to begin with a direct mail piece, and I think this may be it...

Jan 29, 2011 07:10 AM #2
Brenda Whitman, Live in Laramie Real Estate
Live in Laramie Real Estate, Laramie, Wyoming - Laramie, WY
Broker/Co-Owner, Laramie, Wyoming

Thanks Virgina!  I'm bookmarking for future reference.   Well organized and concise!

Jan 29, 2011 07:10 AM #3
Wade Mattingly
WEICHERT Realtors--Bluegrass Living - Lexington, KY

And make sure the lender pulls it.  Most times when you pull your own score, the lenders score is lower.

Jan 29, 2011 08:24 AM #4
Shannon Milligan, Richmond VA Real Estate Agent/Associate Broker
RVA Home Team - Richmond, VA
RVA Home Team - Winning with Integrity.

Great post! Thanks for the info - I reblogged!

Jan 29, 2011 11:42 AM #5
Virginia Gardner
Roy Wheeler Realty Co. - Charlottesville, VA
Realtor, Charlottesville, Serving Central Virginia

I'm glad you found it helpful, Brenda!

Thanks, Shannon... I'm glad to return the favor, since I've re-blogged your posts so often!

Jan 29, 2011 01:01 PM #6
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Virginia Gardner

Realtor, Charlottesville, Serving Central Virginia
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