With mortgage rates near historic lows, borrowers looking to refinance or purchase a home are increasingly curious what they’re eligible for.
A reader recently asked me, “What mortgage rate can I get with my credit score?” So I figured I’d try to clear up a somewhat complicated question.
One thing that determines what mortgage rate you’ll actually receive is credit scoring, though it’s just one of many factors.
Along with credit scoring is documentation type, property type, loan amount, loan-to-value, and much more.
Using credit score alone, it’s impossible to tell a potential borrower what they may qualify for without knowing all the other important pieces of the puzzle.
Generally speaking, a credit score above 720 is the highest bracket, meaning if all other areas of your financial profile are in good standing, you can qualify for a mortgage at the lowest possible rate.
Borrowers with credit scores of say 680, 660, and 620 will have increasing difficultly securing financing, and will receive higher interest rates if a mortgage is ultimately granted.
Unfortunately, I can’t say you’ll get X or Y rate if you have Z credit score, there are just too many factors all in play at once.
Credit score is certainly an important determining factor in both the interest rate you’ll receive and whether you’ll receive financing to begin with, so it’s recommended that you check your credit score months before applying for a mortgage to see where you stand.
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