December 1, 2019

Low cred? Your mortgage dreams aren't dead

Comparison shopping can yield all kinds of bargains, whether it’s a car, groceries, gift, or other item you’re hunting for. And the same is true for mortgage financing. By getting quotes on interest rates and financing fees from different lenders, you’re more likely to score a deal. Now, new research suggests this is especially true for home buyers with less-than-stellar credit scores.

A recent report by Zillow found that those with poorer credit—particularly buyers with scores ranging from 620 to 679—experience more variation in rate quotes than those with better credit. In fact, the median spread for standard mortgage loans (excluding loans that require PMI, private mortgage insurance) was nearly 97 basis points vs. 109 basis points for VA loans and 86 basis points for jumbo loans. That means the rates for borrowers with poorer credit often ranged by around a full percentage point or more. Costlier markets like Seattle, Los Angeles, and San Francisco had the widest gulf in rate quotes—probably due to a bigger share of quotes sought for jumbo loans.

The moral to this story? It’s worth your time to shop around for a mortgage loan, particularly if your credit score is less than 700. Learn more by reading my newest article for CTW Features, published in the Dallas Morning News, available here.