By AnnaMaria Andriotis
Out of all consumer loans, mortgages remain the hardest to get, especially for borrowers with poor credit. Borrowers with scores below 620 are unlikely to qualify, says Ulzheimer.
Lenders say borrowers’ FICO scores are the most important factor in determining whether they’ll get approved for a loan and what their rate will be, though their overall debt compared to income and their down payment size play a role as well.
Borrowers who have FICO scores of at least 760, make a 20% down payment, have a $300,000, 30-year mortgage, and pay one point upfront (that equals one percentage of the mortgage amount) will have average annual percentage rate of 3.3% or about $1,311 per month, according to Informa Research Services. On the other end of the spectrum, those with 620 to 639 scores – if they can get approved — will pay 4.9% on average or $1,587 per month – and annually will pay $3,312 extra per year.