This is your year!

Blog Post Image
Financing

 

Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN

Judy@JudithSutton.com   908 803-0472

EXPECT MORE

THIS IS YOUR YEAR!!

 

What is Your Dream!

What To Know About Credit Scores and Mortgages

 

Few numbers are as important to mortgage lenders as your FICO credit score. This score measures how well you’ve paid your bills and managed your credit. The higher your FICO score, the more likely it is that lenders will approve you for a new mortgage or refinance.

FICO scores range from 300 to 850. FICO says that scores of 740 or higher are considered particularly good, while scores of 800 or higher are excellent. If your scores are in this range, you’ll qualify for a mortgage or refinance at the lowest interest rate.

But what is the minimum FICO credit score you’d need to qualify for a refinance? That varies by lender, but most require that your FICO score be at least 640.

Why your score matters when refinancing

But even if your score hits this minimum, it might not help you when you’re ready to refinance. That’s because lenders base the interest rate they assign to your loan largely on the strength of your credit score. With a FICO score of 640, your lender might attach a higher interest rate to your new loan.

And if your interest rate is too high, refinancing might not make financial sense.

If your goal is to lower your monthly mortgage payment, you’ll want to refinance to a new home loan with a lower interest rate. Most mortgage experts say that refinancing to a new loan with a rate at least 1% lower than your current interest rate will save you enough money each month to quickly cover your lender’s closing costs and to begin saving money each month.

You might not be able to land this lower interest rate, though, if your FICO score is too low. Say your current loan’s interest rate is 7% and your low credit score only qualifies you for a new loan with an interest rate of 6.8%. That slight dip might not bring enough savings to justify the closing costs of your refinance.

Refinancing isn’t free. Most lenders charge from 2% to 6% of your new loan amount in closing costs. If you are refinancing to a mortgage of $250,000, you can expect to pay from $5,000 to $15,000 in these fees. If you don’t shave enough off your monthly mortgage payment, refinancing might not make sense.

You can boost your credit score

Fortunately, you can improve your credit score. It requires paying your bills on time each month and paying off as much of your credit card debt as possible. Do this, and you will steadily improve your score.

Don’t expect instant results, though. Depending on how low your score is, it can take six or more months to boost your credit score to that desirable 740 or higher level. But it is well worth the wait!

Need expert advice? Call me: 908 803 0472 and I can share an expert on my team that will make sense of it all!

By incorporating my personal attention and guidance into the marketing strategy I aim to provide you with 
an Exceptional Selling Experience
while ensuring that your property receives the exposure needed
to attract buyers from anywhere

Your Local Real Estate Connection
Get a positive, helpful partner for buying or selling your home:

Trusted resource for answers about the process
Innovative marketing strategies
Expertise about neighborhood features
Ability to target home searches
Strong negotiation skills
Support through the closing and beyond

  Why would you settle for anything less?

 Adding value for my clients and loving where we live!

Judy@JudithSutton.com 

COLDWELL BANKER...GUIDING PEOPLE HOME SINCE 1906 

 908 803-0472
"...the right relationship means everything..."
SERVING THE SOMERSET HILLS AREA ONE CLIENT AT A TIME

Service & Experience

since 1983