The days when you could easily get a home mortgage with a good credit score alone and without any other documentation are over. Today, lenders will require you to show them a lot more other things before they approve your loan application. Some of such proof are a steady source of income and also a list of your outstanding debts.

Although your credit score will still matter in your home mortgage application, it will only determine how much interest you have to pay. If your credit score is among the highest, you will be eligible to get the lowest interest rates. How much you pay in downpayment also determines the interest rate that you will have to pay. The more you put the down payment, the lower the rate you will get. But borrowers with lower scores are usually required to pay more in down payment and pay a higher interest rate as well.

If your credit score is low, you will also have to pay more in upfront fees. The fees are actually “points”, equal to 1% of the loan amount, which you need to pay to get approved. According to a rate sheet of a lender in Oregon, if your credit score is at least 660 you can avoid paying these points, provided that you only borrow a maximum of 60% of the value of your house. With 600, you have to pay 1 point of fees, and at least 20% of down payment for a loan equivalent to 60% of the value of your house. Other borrowers who have to pay extra points are those who buy investment properties and condos with less than 25% down payment.

These numbers are of course not the same in other places. The best way to find out whether you can get a loan in this credit meltdown and what it will cost you is to shop around.

Popularity: 1% [?]