3 Keys to Raising Your Credit Score and Lowering Your Mortgage Interest Rate

If you are thinking about buying a home soon, there is a single number that can play a huge role in your financial fate: your credit score. Credit scores are a rating that tells lenders about the potential risk of giving you money, using a scoring system from 300 to 800. Having an excellent credit score (defined as 720 and up) can provide you with the best rates and the lowest monthly payments, while scores under 620 make it extremely difficult to get approved for a loan with good terms.

There is no standard scale that defines how an interest rate changes based on your credit score, but generally speaking a difference of 100 to 120 points on your credit score could make a difference of 1.5 percent or more on your mortgage loan rate. If you’re borrowing $250,000 for a home, that’s $225 more on your monthly payment, and over the life of a 30-year loan you’ll pay over $80,000 more in interest with the lower credit score.

The keys to raising your credit score aren’t a mystery, but they do take some time, so here are three things you can start doing right now that will boost your score before you try to get approved for that loan.

Pay Down Credit Card Balances

Lenders look at the amount of revolving credit you have available and compare that to how much of it you’re using. If you have high balances on your credit cards, it will impact your credit rating, especially if your ratio of debt-to-available-credit is over 30 percent. Pay off credit cards, and stop charging things to your cards to keep those balances as low as possible. It’s also a good idea to keep any balances that you do have to one or two cards, rather than spreading out balances across many cards.

Don’t Take Out Other Large Loans

One of the factors that creditors use to evaluate your risk is the number of large loans you have taken out recently. Every time you apply for new credit that impacts your overall credit score, so if you purchased a couple of new vehicles and just took out a big student loan in the last three months, your score will be lower than if you spread out your big purchases.

Pay Bills on Time and Avoid Risky Credit Situations

The best way to maintain a high credit score in the long run is to pay all your bills on time. Sometimes when you’re thinking about a big purchase like a home you’re stashing money away for a down payment or other expenses and you accidentally miss payments on some of your bills, or you significantly reduce your credit payments in the months leading up to the purchase than you were before. Both of these actions can indicate potential risk and could lower your credit score. To avoid the appearance of risk, pay all your bills on time, and don’t do anything drastic with your finances right before you buy.

For more tips on maintaining a good credit score, or to get the latest mortgage rates and find out how to make your dreams of owning a home into a reality, talk to Altius Mortgage today.

Hacking Your Way Through an Easier Mortgage Process

A house is a property most people look forward to possessing and prioritizing among their purchases. While it’s likely for homeowners to pay hefty amounts, you must be aware if you’re already paying too much for its value. What makes a house appear overpriced is the interest rate in your mortgage.

As early as today, you must stop wasting your money on those interest payments. The only way to avoid paying more than you should is by completing your mortgage duties early. More than taking off the heavy burden of payments in the future, it can also save you more money from paying huge interests.

Pay it Bi-weekly, not Monthly

For instance, you got a standard 30-year mortgage; you can shorten it to just 22 years without breaking the law. Instead of paying monthly, you should schedule your payments bi-weekly. Set this schedule with your bank to automatically pay off your dues, but make sure you’re not paying extra for this.

Use Bonuses for Extra Payments

Remember how you’re prioritizing the purchase of your house? It shouldn’t stop until you’ve completely paid off the mortgage. Sacrifice your costly cups of coffee to save more. It’ll help to dedicate all your extra earnings to your mortgage first. After paying for your house, you can enjoy these bonuses better.

Refinance to a Shorter Schedule

Looking for an ideally sure way to pay off the mortgage quicker? Try refinancing to a 10-year or 15-year mortgage. It may look costly to pay bigger amounts. But in total, the base cost is the same as the 30-year one. While there may be additional closing costs and fees, the upside of this technique is that you get to reduce thousands of dollars in interest.

To avoid encountering more complex situations when refinancing, it’s advisable to hire a reliable online mortgage consultant. Their knowledge takes you farther in acquiring better options and opportunities.

Venturing into the mortgage process for the first time can be difficult. It involves a lot of complicated things and terms that may compel you to pay more than you should over time. Here at Altius Mortgage Group, we’ll provide extensive assistance all throughout. Contact us now and our team of professionals can help you navigate the many questions and concerns regarding the practical value of your mortgage.