Tag: Interest rate

Understanding Credit Score and Mortgage Rates Before You Apply for a Home Loan

Written by Altitude Home Loans on March 30, 2025. Posted in Mortgage.

Are you intending to purchase a new home? If so, you should know your credit score before contacting a lender. This number is an important factor in annual percentage rates (APRs), yet many prospective homeowners still wonder about the connection between Credit Score and Mortgage Rates.

Altitude Home Loans has a team of respected mortgage lenders in Tucson, AZ, and covers the importance of credit scores and home loan rates.

What Are Credit Scores?

A credit score ranges from 300 to 850, which lenders use to determine borrower risk. The higher your number, the less likely you are to miss payments.

FICO and VantageScore are the top two credit scoring companies, and the three credit reporting bureaus are TransUnion, Equifax, and Experian.

FICO Scores’ Impact on Mortgage Rates

How much does a credit score affect mortgage rates? Depending on your numbers, you might be eligible for certain home loans at higher or lower APRs. It also determines how much of a down payment you must pay if one is necessary.

In general terms, a higher credit score affords you several benefits, including:

Access to more mortgage types
Larger loans
Smaller down payments
Lower interest rates

Mortgage Rates By Loan Type

You don’t have to have a perfect FICO score or VantageScore to obtain a loan for a new home. Understanding credit scores and their relation to interest rates is only one aspect of borrowing for a new house. You should also consider how your score fits with different loan types, including:

Conventional Loans. The interest rates for conventional home loans are typically competitive for borrowers with good credit scores. The FICO threshold is about 620.
VA Loans. These home loans are for eligible military personnel, veterans, and their spouses. The rates tend to be lower than conventional loans and don’t require down payments.
Jumbo Loans. A jumbo loan is a non-conforming mortgage with a bigger balance than current conventional loan limits, so borrowers must have a high income and credit score to qualify.
FHA Loans. Requirements for Federal Housing Administration home mortgages aren’t as strict as conventional loans. People can get a loan approval with a credit score of 500 and a 10% down payment.

Other Factors That Impact Mortgage Rates

Credit scores aren’t the only factor that affects your ability to borrow money to purchase a property. Others include:

Down Payment Amounts. The more you put down on your home upfront, the lower your interest rate will be.
Debt-to-Income Ratio (DTI). DTI compares monthly debt payments to gross monthly income. A low DTI can trigger lower mortgage rates.
Closing Costs. If you don’t pay these fees upfront, they will become part of the loan, raising the interest rate.

Contact Altitude Home Loans Today

How much does a credit score affect mortgage rates? At Altitude Home Loans in Tucson, AZ, we know how to use credit scores and mortgage credit certificates to help people get the best APR for their new homes. If you’re ready to explore borrowing your options, call Altitude Home Loans at (520) 500-1010.

When Should You Refinance Your House Mortgage?

Written by Altitude Home Loans on September 30, 2024. Posted in General.

Is the time ripe to refinance a house mortgage? It could become your ticket to financial ease!

As the go-to mortgage lenders in Tucson, AZ, we at Altitude Home Loans know a thing or two about the subject. Keep reading as we dive into the nitty-gritty details.

Do It for the Right Reasons

Too many people reassess their mortgages without fully understanding their goals. Some of the best motivations to take the plunge include the following.

Lowering Interest Rates

Does the current market favor borrowers? If you locked in a mortgage at a higher interest rate several years ago, you might want to consider a rate-and-term refinance. You should ideally obtain a rate at least one-half of a percentage point lower than your existing plan.

Check your credit score and report before applying! You’re in a good spot when both have improved since your last mortgage. The best refinance rates go to people with the 740 score and above club.

Removing Private Mortgage Insurance (PMI)

PMI is extra insurance when your down payment dips under 20%. It protects lenders, not you, and adds to your monthly bill.

Refinance your house mortgage to eliminate this costly extra with enough home equity. The savings will roll back into your pocket instead of the lender’s.

Financing Big Purchases

Do you need to cover upcoming expenses? We’re talking about wiping out those credit card bills or avoiding student loans’ hefty interest!

Conduct a cash-out refinance and liquidate your home’s equity. People also use the funds to purchase property or renovate their homes.

Changing the Loan Structure or Term

You might want to speed up your mortgage payoff. Shortening a loan term can save you loads on interest over time. You can also switch from an adjustable rate to a fixed rate for more predictability in your budget.

Both strategies bring peace of mind and financial stability. Talk to your lender, assess the current rates, and see which option best fits your goals.

Know When To Reconsider This Route

Should you refinance? It’s not always the best move for everyone. You generally want to avoid:

Discretionary purchases: Some fall into the trap of risking their home to finance luxury items like high-end vacations, extravagant cars, or other non-essential expenses.
Changing loans halfway through the term: You probably won’t save on refinancing when you’re too far along in your mortgage. It means reaching a point where the bulk of the payment goes to the principal balance rather than interest.
Selling too soon: If you need to put your property on the market in the next few months, you probably won’t have enough time to recover the refinancing costs.

Is Refinancing Worth It?

Take the time to analyze the situation by calculating the potential return, as well as accounting for closing costs and loan-to-value ratio. Altitude Home Loans always has you covered if you need assistance.

Dial 520-500-1010 to refinance your house mortgage — just have the required documents and we handle the rest! Give us a call today.