Rates and your credit

    HOW YOUR CREDIT RATING IMPACTS THE INTEREST RATE

If your credit score is below 740, your lender may have to charge (you) more to deliver the best  interest rate available. In January of 2008 Fannie mae (FNMA) issued a risk based pricing matrix for interest rates. This model is used by each lender that delivers (sells) their loans to (Fannie Mae) FNMA and (Freddie Mac) FHLMC.  Simply put - your interest rate is mainly dependent on your credit rating. If your credit rating is not considered excellent (over 740), the cost to deliver the rate to the investor -is higher. This cost is then passed on to you (the borrower) as a percentage of the loan amount (called “points”). The chart below shows the actual matrix used by lenders and what it costs  to deliver a specific interest rate per your credit score….Real World: Rule of thumb: The higher the interest rate a lender charges, the lower the fees a lender should be charging you! Make sure you are getting your BEST RATE possible…Get more than 1 estimate!

                                            ** Credit Scores    

LTV’s       (<=619)   (620-639)    (640-659)  ( 660-679)   (680-699)   (700-719)   (720-739+)

01.00-60       1.000        0.500             0.500       0.000           0.000          0.000         -0.250

60.01 - 70     1.500        1.500             1.250       1.000           0.500          0.500           0.000  

75.01 - 80     3.000        3.000             3.000       2.500           1.500          0.750           0.250      

85.01 - 90     3.000        2.750             2.250       1.750           0.750          0.500           0.000

90.01 - 95     3.000        2.750             2.250       1.750           0.750          0.500           0.000

  

Top Line in Bold from left to right represents credit score ranges (<619 - 739+) 

Top Line (Bold) on the left LTV’s represents the Loan to Value of the property. Ranges are  (<60%ltv - 95%ltv). Loan to value is calculated by dividing the outstanding or proposed loan amount into the appraised (refinance only) or Sales price of the property. Ex: Purchase - Sales price $100,000.00 - Down payment 20% = 80% loan to value

Ex: Refinance - Home value $300,000.00 - Loan amount $220,000.00 = 73.3% LTV. 

Examples of charges added to your loan with different credit scores

Ex. - If you have a mid credit score of 692 and have a loan to value of 77%, the cost to the lender (by means of) *discount points is 1.50%.

Ex. - If you have a mid credit score of 740 and a loan to value of 90%, the cost to the lender (by means of) *discount points will be 0.00 to your proposed rate.

 

* A discount point is calculated as a percentage of the loan amount. Ex. 1% of 150,000.00 loan amount = $1500.00.

** 15 year conforming loans, FHA, VA, and USDA loans do not conform to the above matrix. Different pricing matrix is used.

Call (904) 545-2777 for a customized quote or click on the “Get your Best Rate” box for an immediate rate quote. * Make sure to put in your credit score for accurate pricing!