Mortgage Rate News

When it comes to mortgage loans, it about more than just your income. Your credit score also matters. Here’s why:

Mortgage lenders look at people in terms of risk. Risk is all about how likely you are to default on a home mortgage loan. Your income plays a roll, as does the amount of debt you already have. And your credit score offers a numeric look at how risky you are. The higher your score, the less risk you pose to mortgage lenders. The lower your score, the more likely it appears you are to default on a loan, leading to foreclosure.

This thinking also applies to other types of mortgage loans, such as home equity loans or a second home mortgage. In fact, your credit score may need to be higher for these types of second mortgages because the debt load you already have from the home mortgage loan figures into how much risk you present.

Keep track of your credit score

Because your credit score is such an important part of whether or not you get a home mortgage loan, and because it influences the mortgage interest rate you get, it is important to keep tabs on it. If you have a lower credit score, you will pay more on your home mortgage loan, through a higher mortgage interest rate. Mortgage lenders charge you more to finance if you are a higher risk. This can amount to tens of thousands of dollars over the life of the home loan.

You can get a free credit report from each of the major bureaus every year, but it is worth noting that you credit score is not included in the report. When you get your credit report, you can pay between $5.95 and $7.95 to view your credit score as well. This is worth seeing, since it will help you distill the information from your credit report into a value that is more readable.

Tags: home equity loans, credit score, home mortgage loan, home equity second mortgage,
second home mortgage, get free credit report, mortgage lenders