Many home buyers understand that the state of their credit affects the type, amount, and interest rate of the loan that they will be able to receive. However, they may not always be aware of just how much of a role their credit plays in procuring a mortgage. We recently experienced an example of just how dramatic the effects can be with one of our borrowers.
This particular borrower, had a perfect credit history – with one minor oversight: an unpaid balance of $222 on a JC Penney’s credit card, which was discovered once their credit was pulled. Due to this very minor delinquent payment, the borrower’s credit score came in at 667. Had the borrower not taken a hit for this JC Penney’s charge, their credit would have been well over 775.
In an effort to remedy this matter, we advised the customer to pay off the credit card balance, which they immediately did. Two months later, we re-pulled the borrower’s credit score, which had increased from 667 to 713. Of course, this increase in credit score is great, but how did it help the borrower overall? As a result of the 46 point increase in credit score, the borrower saved a total of $1,035.32 on their Loan Origination Fee for their $82,900 loan amount. To put things in perspective, had the amount of the loan been $200,000, the borrower would have saved $2,500.
Don’t underestimate the impact your credit score can have on your mortgage loan, and always get pre-qualified as soon as you start thinking about the possibility of a loan, in order to ensure that your credit is in order, not matter how sure you are of your credit history. To get pre-approved for your loan, contact The Mortgage Brothers Team today with any questions you may have.BACK TO LIST