Credit Scores Down Payments And Mortgage Interest Rat
Q: If your credit score is low enough to get you a high interest rate on a mortgage, can you reduce the interest rate with a bigger down payment? How big does the down payment have to be to get the best possible interest rate, as if you had perfect credit? Do most banks do it that way, or only a few specific mortgage companies?
A: -There are a few ways a borrower with high scores can get a better interest rate and you have touched upon one of them. Increasing your downpayment to anywhere between 70-80% of the value of the home (LTV), would have a positive effect. Another option is to use discount points to pay down the interest rate. I don't suggest you do any of this though...I recommend that you get a no-cost loan (no discount points, min. down payment, etc.) and view this loan as a "bridge" loan to better credit. As you most likely want to refinance out of this loan was your credit score has improved, why would you want to buy down an interest rate on a loan that you intend to get rid of? Once your credit score has improved, you can invest in buying down the interest rate when you refinance. Thinking about getting a new mortgage or refinancing an existing one? Join the Interest Rate Investigator Newsgroup to determine if you should lock or float with the Daily Mortgage Interest Rate Watch. -Credit score improvement timelines depend on the type, qty and severity of issues involved as well as the approach in which one takes to improve it. The use of rapid rescoring can bring about