Fellow Real Estate Professionals,
This is about as good of an article I have seen on why credit scores matter so much. I feel buyers often wonder if us crazy lenders are making stuff up on the fly about how loans are priced. This is the article (see link below) and I have cut and pasted below the matrix from Fannie Mae of how this works (this is FEE NOT RATE):
And by the way…………..the two boxes are added together (so if someone buying a rental is putting down 20% vs 25% and they have a 700 to 719 credit score the points are 3.375 + 1.25 or 4.625 points). Another buyer with 740 credit with 25% down would only pay 2.375 points). 5% more down and great credit makes a huge difference. An owner occupied putting down 40% with 740 credit pays no additional “G-Fees” from Fannie. This is why it is tricky throwing a rate out there like the old days prior to getting the buyer pre-approved.
Seriously, is there a difference between a 700+ credit score & a 800+ score? – Yahoo Finance: http://finance.yahoo.com/news/seriously-difference-between-700-credit-110059632.html