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Credit score is 630 and I want to purchase a home for 130,000. I do not have any credit card debt or other debts except for a car payment (I bought the car in Dec. 2008). I have been employed with the same employer for 6 years. I keep reading that with a crdit score of 630 I can't get the best rate, but what rate would it be?

gmakerley · Posted: Tue Sep 08, 2009 11:21 am Post subject:

guest, there are a variety of interest rates available, all of which are "priced" with origination and/or discount points.

on a conventional loan, you'll find that the way the particular interest rate is priced will be affected by your score. for example, in your case, you can pay as much as 3 additional points compared to someone with a score over 700.
if, on the other hand, you seek an fha loan, you'll still feel a penalty, but it's far less than with conventional loans. at 630, you'll get hit for an extra .25 point.

by all means, if you are purchasing a home for owner occupany, go fha! rates are quite comparable with conventional, and the costs of obtaining that rate will be far less. in fact, you'll find fewer closing costs with fha than with conventional.

you can still get "the best rate" but it's a matter of how much comes out of your pocket to get that rate.

jveenstra · Posted: Tue Sep 08, 2009 11:25 am Post subject: Rate

The rate for a 630 credit score is 3.00 points more than the rate would be with a credit score of 740 or higher for a Fannie Mae or a Freddie Mac mortgage.
To put it another way, the rate would be about 5.375% and 3.000 points or about 6.250% and zero points if you choose not to pay points.
If you are looking at an FHA mortgage, there is no rate difference for the credit score which you note, but FHA mortgages have different characteristics other than the interest rate.
You give no info as to the size of your down payment. If at least 5% or more, you can be talking about Fannie Mae or Freddie Mac. Less than that, has to be an FHA mortgage.

Guest

Anyone else thinking of re-financing the mortgage at the new low rates this morning? I'm seeing some 5.30 APRs for 30yr fixed w/ 0 points.

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