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Most people know that low credit scores influence the mortgage rates for which they're eligible. With lower scores come higher rates.
What most people don't know, though, is that low-FICO families pay more closing costs, too.
Today, low credit scores are more punitive than ever.
In today's conforming mortgage world, unless your credit scores are 740 or better, Fannie Mae and Freddie Mac can subject you to higher mortgage rates, higher loan costs, or both.
740 FICOs are a high hurdle for most households.
I penned a piece for TruliaPro on the topic. It's titled "Better Rates Start With Better FICO Scores". An excerpt :
To mortgage lenders, your credit score represents your likelihood of making on-time mortgage payments for the next 90 days. “90 days” matters because, after 90 days without payments, a homeowner falls into default.
Like most else in finance, those with the lowest risks get to pay the lowest rates.
The article comes with a free download, too.
The good thing about mortgage rates is that they're relative. With mortgage rates as low are they are today, below-average credit scores don't feel like they do as much damage.
Today's mortgage rates are rock-bottom. Regardless of your FICO, it's a good time to look at a refinance. With the money you might save each month, there are few reasons not to.
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Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
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