Credit - Scores and Interest Rates
How your credit score affects your mortgage rate!
The most influential determinant of your mortgage rate is your credit score. The higher your credit score, the lower the interest rate on the mortgage.
Borrowers with high credit scores tend to get lower interest rates on mortgages than borrowers with low credit scores.
- A credit score of 740 or higher qualifies you for the best interest rates from most lenders
- It is difficult, but possible, to get a mortgage with a credit score under 620
- The difference between the best and worst rates can vary substantially
Not only is a high credit score vital in getting a low mortgage rate, it influences whether you can get a home loan at all.
One percentage point makes a significant difference!
Monthly principal and interest payments on a 30-year fixed-rate mortgage of $250,000
| Interest rate | Monthly principal and interest payment |
|---|---|
| 4.00% | $1,193.54 |
| 5.00% | $1,342.05 |
The difference in the payment amount is $148.51
Note: Interest rate scenarios are for illustration purposes only
