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Meredith, Other/Just Looking in 46528

I heard that the worse your credit is, the higher your interest rate will be when buying a house. WIth the

Asked by Meredith, 46528 Thu Feb 14, 2008

interest rates continuing to drop, what are the chances I can get a decent rate when ready to buy?

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Improve your credit score as quickly as you can. That will make a huge difference in your interest cost on everything. It will also cause lots of other things to be cheaper for you (insurance of all kinds for one). When intrest rates go down they all go down but high risk interest rates move very little.
0 votes Thank Flag Link Thu Feb 14, 2008
Hi Meredith,

I guess it really depends on how bad your credit score is and what you call a decent rate. Your best bet is to really work on cleaning up your credit - get with a mortgage councelor and start right away with a plan. It may be easier than you think.

When you have bad credit, you are a huge risk to a lender (just look at what's happening in the market right now). If they decide to take the risk of giving you a loan, they will want to leverage that risk by charging you a high interest rate.

Several years ago, when 30 year fixed rates were in the low 5% range, I saw people with bad credit paying 12% interest or more. When you figure the payment, that's huge.

Bottom line is to focus on turning around your credit from this date forward and don't go back to your old ways. If you can't pay for it, don't buy it. Save your money for what you need to buy.

Hope that helps.
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0 votes Thank Flag Link Thu Feb 14, 2008
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