Lenders take your credit score and a few other pieces of your information into consideration, such as age and salary, and make a decision about how your loan will play out. In short, a high score will be less risk, therefore a lower APR and less overall cost to the borrower.
Here’s a chart comparing APRs and total cost for a 30-year fixed mortgage on a $500,000 house: Credit Score APR Including interest, your house will cost…
- 760-850 4.01% $860,760
- 700-759 4.24% $884,160
- 680-699 4.41% $902,880
- 660-679 4.63% $925,560
- 640-659 5.06% $974,880
- 620-639 5.60% $1,003,560
What I get from this is that by keeping a good solid line of credit from NOW until the purchase date of YOUR home (whenever that may be), I will lower my monthly mortgage payment almost $500 a month and end up saving myself near $150,000 in the long run.