Let's Talk About FICO Scores
Your FICO scores affect your interest rate when you’re buying a home (and contrary to popular belief, you can buy a home after a foreclosure or bankruptcy if you work to improve your credit).
What Are FICO Scores?
Your FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use your FICO score to find out whether you’re a big risk (and whether they’re willing to take that risk on you).
What’s a Good Credit Score?
Credit is scored on a big scale ranging from 300 to 850. The higher the number, the better your credit.
According to The Balance, here’s the breakdown on what interest rates you may qualify for based on your FICO credit score, assuming that you have a 10 percent down payment and meet all the lender’s other requirements:
- FICO Score of 600 to 640: + 1.625 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 7.5 percent.
A $200,000 amortized loan at 7.5 percent would give you a monthly payment of $1,398. - FICO Score of 560 to 580: +2.875 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 8.75 percent.
A $200,000 amortized loan at 8.75 percent would give you a monthly payment of $1,573. - FICO Score of 540 to 559: +3.425 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 9.3 percent.
A $200,000 amortized loan at 9.3 percent would give you a monthly payment of $1,653. - FICO Score Under 540 to 500: +3.875 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 9.75 percent.
A $200,000 amortized loan at 9.75 percent would give you a monthly payment of $1,718. - FICO Score Under 500: +6.25 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 12 percent. With a FICO of less than 500, you will not qualify for a 90 percent loan, but you may qualify for a 65 percent loan, therefore, you need to increase your down payment from 10 percent to 35 percent.
A $200,000 amortized loan at 12 percent would give you a monthly payment of $2,057.
Are You Buying a Home in Port Aransas?
If you’re looking for a home in the beautiful city of Port Aransas, we’d love to help you.
Call us at 361-563-7788 or get in touch with us online to tell us what you want from your next home. We’ll begin searching right away.
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- Port Aransas homes for sale
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- North Padre Island homes for sale
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