Home Buying and Your Credit Score

So, you've found your dream home- perfect location, perfect layout, and a great price. The next step is getting qualified for a loan. And, if you are interested in getting ahead financially, rebuilding credit scores can make a huge difference in what you pay over time. Say you are looking at a $400,000 loan on your property. Let's break down how your credit score impacts what you'll pay per month and ultimately what you invest in this property over time.

If your FICO score is 620 versus 720, the difference between your mortgage payments on a $400,000 loan would be around $457.00 a month because at 620, you will be paying a higher interest rate (we figured 7.25% at 620 FICO and 5.5% at 720 FICO.) In other words, the higher your credit score, the less you pay per month. In this example, at the end of the year, a higher credit score would equate to an annual savings of $5484. Furthermore, if you have a 720 credit score, you could also consider biting off a bigger investment and pay around the same mortgage per month as a person whose FICO is in the 600's and looking at a lower-priced home. For example, for somebody with a 620 FICO score who locks in at 7.25% on a $400,000 loan, their mortgage would be around $2,728 per month. Conversely, repair your credit score to 720 or above and you could look to pay $2,725 for a $480,000 loan at 5.5%, which means you are able invest $80,000 for the approximately the same mortgage.

These figures illustrate how bad credit repair can ultimately save you thousands annually and even allow you to invest more, which means you are paying yourself money and gaining wealth for the long run. If your credit score is below the 700's, especially if you are buying a home or property, consider credit repair. You may also consider contacting credit repair services company to help guide you through the process. Vitesse Financial has been assisting clients improve their credit standing for over ten years. Visit our website at www.vitessefinancial.com.