We’ve been getting a lot of calls from current and future clients nationwide and local about the recent, and future, Fed Rate increases. While our economy is booming, the Fed in their wisdom is offsetting inflation by increasing the rate at which the Federal Reserve funds banks. This rate increase makes its way down to you and me, when we take out just about any loan. Their belief is such that if our economy grows too quickly, we will have inflation, so, by the simple laws of economics, if you charge more for something (money) people will buy less of it, however you can lower your interest rate by increasing your credit score.
For folks who are interested in buying a home, in Albuquerque, NM; Denver, CO or Dallas, TX, etc. you can actually offset these rate hikes to some degree. By having a higher credit score, you can qualify for lower interest rates in certain types of mortgages. For instance, the Fed just agreed to increase the rate by 25 basis points in December, 2018. They also, plan on continuing these increases through 2020, ending at an over all increase of an additional 100 basis points, or 1%. This translates into an extra $163.00 a month in mortgage payments, for the average property in Albuquerque, NM which is the forecast to be $219,000.00 by October, 2019 according to Zillow.
Take a look below at the vast difference in the interest rate based on your credit score:
In short, the higher your credit score is, the lower your interest rate is on a conventional mortgage. For instance,if you have a 623 credit score you are paying 1.5% MORE , than someone who has a 740 credit score.
Want to buy more house with less money??
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Scoreology – The Science of Credit Repair