How Shopping For A Mortgage Could Cost You Money
If you are looking for a home to buy, be careful about how you shop for a mortgage; it could cost you money. One of the most important assets you can take into a mortgage application is your credit score. Having a credit score over 700 is ideal while having over 740 is even better. However, every time you inquire into a mortgage, that lender will tap your credit history and leave footprints behind. Those footprints could drop your credit score by a few points, but five mortgage inquiries, and that could be 10-15 points or more knocked off your credit score. If that takes you below 740, your mortgage will cost you more – below 700 and it will cost you much more.
Often, the easiest approach is to see a local mortgage broker. They will tap your credit history once, then use that information to find the best value mortgage for you. Shopping for a mortgage is not the only area that home buyers need to look at. Credit scores change month to month depending on how much outstanding credit you have, whether or not you have been late in a payment, and whether or not you have had a recent addition to your liabilities (in other words, added new debt).
There are now reports that indicate home owners who have accessed government programs to help them with their mortgage, are having that information included in their credit history, and that it’s having a severe affect on their credit score. The lesson for those who are about to seek a mortgage is very clear – protect your credit score at all costs. Watch what you spend, try to reduce your debt-credit ratio, and reduce the number of inquiries made to your credit history.
Your credit history is becoming broader every day with landlords now making entries as are local government departments, for example, overdue parking fines. While these are not always serious credit infringements, they can all add up and reduce your credit score just enough to cost you a lot of money. The lower your credit score, the higher your down payment, the higher the interest rate, and you’ll also need to add in mortgage insurance – that could total tens of thousands of dollars over the life of a loan. Shop for a home, not a mortgage.
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