Having a “Good” Credit Score May Make You Pay More Mortgages – Here’s How

Having a good credit score has long been associated with being financially responsible. Unfortunately, when it comes to one of the biggest purchases most people will ever make, having good credit may not have as many benefits as you think. According to recent federal rules, those with good credit scores could be paying more for mortgages than low credit scores.

Let’s dig deep!

Energy Pic / Pexels | According to the new federal rules that are operational by May 1, 2023, you will be paying more mortgages if you have a good credit score.

What is Considered a “Good” Credit Score?

Generally, any score over 700 is considered an excellent or “good” score by most lenders and creditors. A score above 770 is thought to be particularly desirable and can help borrowers get their mortgage loan approved faster and at potentially lower rates – and this credit score makes you eligible for almost every single perk throughout the country.

How is a Good Credit Score Impacting Mortgage Rates?

The Consumer Financial Protection Bureau (CFPB) has recently implemented new rules that require mortgage lenders to charge different interest rates for consumers with good credit scores. The new regulations state that borrowers with higher credit scores will pay more than those with lower credit scores, even if the loan amount and other factors are the same.

This means that people with “good” credit can be paying hundreds of dollars, or even thousands of dollars extra in interest over the course of their loan term.

Anete / Pexels | Any credit score above 700 is considered a “good” score.

What are Some Ways to Reduce Your Mortgage Rate?

For those looking to reduce their mortgage rate, there are some options available. Shop around for competitive interest rates, and make sure to check with a few different lenders. Apart from that, always ask for discounts or other special offers that may help you save money. This will give you an idea of ‘special’ discounts if there is an option.

Likewise, it can also make you eligible for special discounts and if it saves you some bucks, why not ask for it? Finally, look into refinancing your mortgage if you think it would be beneficial. Refinancing can help you lower your monthly payments, reduce the amount of interest that you pay over the life of the loan, and shorten the term.

Having a good credit score is an important step towards a responsible financial future. However, when it comes to mortgages, those with good credit scores may have to pay more than those with low credit scores due to recent federal regulations. Fortunately, there are still ways to save on your mortgage rate and potentially reduce your overall cost. By shopping around for competitive rates and taking advantage of any discounts or special offers available, you could get a better mortgage deal.

Max / Pexels | To ensure that you pay less in mortgages, shop around and ask for discounts.

The Final Word

Having a good credit score can be an asset in many ways. But unfortunately, when it comes to mortgages, lenders may take advantage of those with higher credit scores. How? Well, by charging them more than those with lower scores.

That is why it is important to research and shop for the best rate available before signing on the dotted line for your new home loan. With careful planning, you can save money and still get the house of your dreams.