I have many potential buyer’s ask why their credit score is important. Well, it directly effects the lending rate. That is the interest percentage rate you will pay to borrow money. A lower credit score will equate to quite a bit of money over the life of a loan. I read this article in The MReport that spells it out in black and white. Thought others might also find it interesting.
Credit Scores vs. Lending Rates
Borrowers with the best credit saw their average annual percentage rate (APR) barely drop from May to June. The upper 95thpercentile saw an average of 4.34 percent APR on conforming 30-year fixed purchase loans last month, which was down from 4.36 percent in May, according to the June Mortgage Offers Report from LendingTree.
“The loan note rate of 4.89 percent is the highest since March 2016 and was unchanged from May,” the report stated. “We prefer to emphasize the APR as lenders often make changes to other fees in response to changing interest rates.”
Consumers with credit scores above 760 saw offered APRs of 4.86 percent in June. That compares to 5.14 percent APRs for consumers with scores between 680 and 720.
The APR spread of 27 basis points between these score ranges was down two basis points from May, and represents almost $14,000 in additional costs for borrowers with lower credit scores over 30 years for the average purchase loan amount of $231,606, LendingTree reported. The report attributed the extra costs to higher interest rates and/or fees.
For the average borrower, things went in the opposite direction from those in the upper tiers in June. Average borrowers saw purchase APRs for conforming 30-year fixed loans offered on LendingTree’s platform up eight basis points, to a flat 5 percent, according to the report
To Read The Entire Report Click Here
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