MORTGAGE LOANS

Credit Scores and Mortgage Loan

In the realm of mortgages, a credit score is one of the most vital pieces to the equation regarding loan approvals. Scores range from 300 to 850 and are calculated using a variety of sources represented on a credit report. The data on the report is typically arranged into five categories, with each category's value based on percentages. The percentages below reflect the importance of each category in determining a score for the general population. For people who have not utilized their credit for a long period of time, the percentages below tend to be somewhat skewed.

• Payment History (35%) • Balances Owed (30%) • Length of Credit History (15%) • Types of Credit Utilized (10%) • New Credit (10%)

Credit scores are generated using a formula based on the information detailed within your report. Credit scoring agencies such as Equifax, Experian and TransUnion compare the information in each credit report to millions of other people and determines a score with a high degree of accuracy, predicting how likely someone is to pay their bills. The majority of Americans have credit scores between 600 and 800, with a credit score of 720 or higher securing the more favorable rates and terms on a mortgage loan.

The bottom line is that it pays to have a favorable credit score, literally. The higher the score, the lower the mortgage rate. Based on the pricing of a nationally prominent mortgage lender, on a $250,000, 30-year fixed-rate mortgage with an LTV of 80%, the difference in a credit score of 660 and 740 is $214 in a monthly principal and interest payment, or more than $77,000 over the life of the mortgage loan.

Bad Credit Home Loan Refinancing - A Hope For People With Poor Credit
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What Are the Advantages of Countrywide Foreclosures and How to Search For Them?
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