Credit Score Is More Important Than Ever!

In the wake of declining interest rates this week, the phones are starting to heat up. Borrowers looking to refinance are surfacing and I wanted to point out one very critical item. Credit score is becoming more and more important. In the past you could have a 680 score (in some cases even lower) and you could get the best rate. Heck 580 could even get you a respectable rate during the high times! Since then changes have been coming down the line that are constantly adjusting this criteria. Now pricing hits are given as your score drops below each pricing threshold. These levels are 740, 720,700,680,640,and below 620. With each level comes a new hit and they get much more severe the lower the score is. For example 740 is eligible for 5.875%, 720 gets 6%, and this goes on until you get to 640 where the rate is 7%. More hits come after 640, but then you run into lenders not offering your broker compensation for doing the loan and they might be forced to charge you an origination fee in order to do the loan at the 7% rate.

It makes perfect sense why changes have been made. They needed to be made in a big way, but I feel they have gone to the extreme! Nevertheless we must cope with these changes and march forward. Just keep this in mind when you see rates advertised and you are shopping around. 5.875% sounds great, but that may not even be on the table for you. You just have to find out. It isn't your broker trying to pull a fast one. This is just the environment we are working and living in. The more knowledge you have on this subject will allow you to be a smart shopper!

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