Since the election of Donald Trump, mortgage rates have been on the rise. For many homeowners, this is worrying, and for potential first-time buyers, concerns will be even greater as the opportunity to get a cheap deal moves further out of reach. Many factors contribute to the mortgage rate that people are offered, but good credit scores allow access to the lowest available rates.
Realtor.com's chief economist Jonathan Smoke collated data for 170,000 mortgage loans offered to consumers between 1 September and 7 November. He compared the rates borrowers were able to access for a 30-year fixed rate home loan, taking into account their credit scores. Smoke discovered that those with higher scores were able to get lower mortgage rates. For instance, scores below 625 meant mortgage approvals were hard to come by, with rates at the high end. Increasing credit scores by just 25 points opened many more mortgages, with average rates of 3.88 percent. Those with scores over 725 saw average rates fall to 3.62 percent.
The research shows that higher credit scores open many money-saving opportunities when it comes to home loans. Though rates have risen since Smoke conducted the research, a similar trend is likely to be noticed, with high credit scorers able to gain the cheapest mortgages. Paying fees to access a discounted rate, or providing a larger down payment are two other ways to lower the cost of home loans.
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