How Do Credit Scores Affect the Cost of Your Maryland Mortgage Home Loan?
I had a client referred to me by one of my favorite realtors. After a discussion I determined that this borrower had done everything right.
- She had been working with the same company for several years.
- She had a great rental history.
- She had saved money for a 20% down payment and closing costs, giving her a strength in negotiating a contract.
- She had plenty of reserves (additional money left after closing).
- She knew where she wanted to live, what was important and what things she could compromise on.
- She knew what monthly payment she was comfortable with making for her mortgage.
Her credit score was really good at 716, but that score would cost her almost $2000, unless she had Mortgage Mama looking out for her!
On conventional financing, she was just fours points below the 720 cut off of one of the Loan Level Price Adjustments (LLPA) for loans being delivered to Fannie Mae. With 20% down, a credit score of 716, the LLPA is 1%, at 720, that adjustment drops to .5%, if we could help to improve the score up to 740, it drops to .25%.
What this means is on a 200,000 loan, 1% translates to $2000. Just a 4 point improvement saves $1000! By asking the client to pay off a few small bills (less than $500 total), and requesting a "rapid re-score" from the credit bureau, we were able to help her improve her middle score by 6 points (to 722), saving her over $1000 in fees!
Your credit score is extremely important in today's mortgage market, make sure you have a loan officer who understands how you may be able to improve your credit to get the best loan for your situation.
Please be aware that sometimes there is nothing you can do in the short term to improve your score. Sometimes, time is your only option. Waiting to increase the length of time from a derogatory credit hit may be the only answer. Often there are small changes folks can make to improve a credit score sooner than later!
If you are wondering How credit scores affect the cost of your mortgage home loan in Maryland, give us a call. We are happy to review your credit report to determine if you may have areas where you can improve your score, and save you money!
If you are considering a home purchase or a refinance, the sooner that you have a credit review, the better. If you don't have a plan in place, you may over pay for your mortgage!
How Do Credit scores affect the cost of your Maryland Mortgage Home Loan? To find out, call today!