WORCESTER 508-471-3018
Metro West 508-709-0024

How does a credit score impact mortgage financing?

Credit ratings can work both ways. Lenders may rely on them to assess the risk of a prospective client. Homebuyers with a good credit rating may be able to obtain more favorable mortgage financing.

But how much does a credit score really tell? Can a lender rely on credit rating agencies to measure the risk of a particular lending transaction? Does a low score accurately predict whether a borrower will default on his or her mortgage obligations?

Such skepticism is a valid concern, considering the antics of Standard & Poor's. The company received a $1.5 billion government fine for issues over its ratings of certain mortgage-backed securities.

Fortunately, a real estate attorney can help answer questions posed by lenders and buyers alike. Although a good credit score is not the only factor involved in a lender's due diligence, it might impact a borrower's rate of interest.

An attorney that focuses on real estate can help potential buyers gather their financial information to gauge whether a new mortgage is even affordable. In addition, having an accurate listing of monthly expenses and financial documents in one place, like Form W-2s, tax returns, pay stubs, bank statements and a recent credit report, may provide more leverage in negotiations with lenders. 

An attorney can also provide more context about how credit scores are calculated and can impact real estate purchasing decisions. For example, an individual's payment history and outstanding debts, or balance-to-credit-limit ratio, play a large role in a credit score. An attorney can also explore the various mortgage financing options. An attorney might even suggest a Federal Housing Administration mortgage loan that is federally insured, if it offers better terms.

Source:  LifeHealthPro, "LTCI Watch: Ratings," Allison Bell, Feb. 4, 2015

No Comments

Leave a comment
Comment Information
Email Our Team

Contact Us Today To Learn More

The skilled attorneys at SederLaw stand ready to handle even your most difficult legal issues. Turn to us for skilled representation to help you accomplish your legal goals.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

An Impressive Track Record
Of Achievement In The Law


Worcester Office
339 Main Street
Suite 300
Burnside Building
Worcester, MA 01608

Phone: 508-709-0024
Phone: 508-471-3018
Fax: 508-831-0955
Map & Directions

Metro West Office
1900 West Park Drive
Suite 280
Westborough, MA 01581

Phone: 508-471-3018
Fax: 508-831-0955
Map & Directions