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Understanding the basics of your credit score can help you scorethe best mortgage by wwy yrj
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Understanding the basics of your credit score can help you scorethe best mortgage by WWY YRJ
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| Article Posted: 01/17/2013 |
| Article Views: 54 |
| Articles Written: 1412 - MORE ARTICLES FROM THIS AUTHOR |
| Word Count: 482 |
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Understanding the basics of your credit score can help you scorethe best mortgage |
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Business,Business News,Business Opportunities
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There is a raging debate today among financial pundits on theimportance of or the risks associated with taking on financialdebt. Best selling authors, Donald Trump and Robert Kiyosaki, bothextol the virtues of taking on large amounts of debt, especially ifit is to be used to finance real estate purchases. However, the one area in which there are no disputes isthat every consumer should do everything that they possibly can tomaximize their own personal credit score and to reduce their ownpersonal cost of borrowing money. Your credit score has become an increasingly important determinantof your personal cost of capital. The lower the cost of capital,the more debt you can take in and the easier it will be for you toservice the debt both today and into the future.
A higher cost ofborrowing will put increasingly financial pressures on your familyas you carry the burden of higher monthly payments and interestexpense. When seeking a new mortgage , your credit score is a primary determinant of your interest rate . Mortgage companies rely on your credit score, which is a mathematical model thatassesses the information within your credit report and returns aquantitative measure that represents your relative likelihood tothat you will be able to pay back your outstanding debt. There are three primary credit reporting bureaus in the UnitedStates: Experian, TransUnion and Equifax, each which maintain adetailed credit report on each consumer.
You are able to receiveone free credit report each year from each of the bureaus but youwill incur a minor cost to receive your personalized credit score.This small investment is well worth it to give you a view into whatthe mortgage companies will be seeing when they evaluate yourcredit. So important is your credit score to your eventual mortgage rate?Well, accordingly to Fair Issac, which is the company that producesthe FICO score most commonly used in the mortgage industry, acredit score in the range of 700-759 (850 is the highest possiblescore) and 620-659, could represent a full percentage pointdifference in your mortgage. While that does not seem like much, ona $250,000 mortgage fixed over 30 years, the difference between a6.5% mortgage and a 7.5% mortgage is $60,000 in additional interestover the life of the loan and a monthly mortgage payment of $170more with the higher interest loan. This is money that you coulduse to more quickly pay down your mortgage or increase yourpersonal savings. With such a large difference in your borrowing costs dependent onyour credit and credit score, it is well worth your time to knowexactly where you stand today and to develop a plan to reach yourtarget credit level in time for you to purchase the house or carthat you want. I am an expert from Textile Finishing Machinery, usually analyzes all kind of industries situation, such as hang gliding harness , discounted business class.
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