Use These Mortgage Charts to Easily Compare Rates

Last updated on December 14th, 2020

One of the things prospective home buyers and existing homeowners seem to care most about is mortgage rates.

And for good reason – the interest rate you receive on your home loan dictates what you’ll pay each month, sometimes for as long as the next 30 years. That’s 360 months!

The rate you receive can also completely make or break your home purchase, or sway the decision to refinance a mortgage.

As such, I decided it would be prudent (and helpful) to create a “mortgage rate chart” that displays the difference in monthly mortgage payment across a variety of interest rates and loan amounts.

My New Expanded Mortgage Rate Chart

mortgage rate chart

  • I created a fresh mortgage rate chart that factors in the new record low rates
  • And the possibility of them drifting even lower over coming months and years
  • The chart is also more granular because rates are broken down by eighths as opposed to quarters
  • Also available in 50k increments if your loan amount is closer to that

mortgage rate chart 150k

These charts can make it quick and easy to compare rate quotes from mortgage lenders, or to see the impact of a daily rate change in no time at all.

After all, mortgage rate updates can happen frequently, both daily and intraday. And rates are especially erratic at the moment.

So if you were quoted a rate of 3.5% on your 30-year fixed mortgage two weeks ago, but have now been told your home loan rate is closer to 4%, you can see what the difference in monthly payment might be, depending on your loan amount.

Today, that scenario might be the opposite. A quote of 3.5% a month ago might now be 3%, or even below 3%.

That has forced me to create a new expanded mortgage rate chart that contains 30-year fixed interest rates all the way down to 2%. Whether they get anywhere close to that remains to be seen, but never say never.

I just hope I don’t have to make another chart…

Anyway, this is all pretty important when purchasing real estate or seeking out a mortgage refinance, as a significant jump in monthly mortgage payment could mean the difference between a loan approval and a flat out denial.

Or you might be stuck buying less house. Or perhaps driving until you qualify!

30-Year Mortgage Rates Chart

Mortgage Payment Chart

Click to enlarge

  • Use the 30-year mortgage rates chart above
  • To quickly ballpark monthly principal and interest payments
  • At varying interest rates and loan amounts
  • While handy for estimates, don’t forget the taxes and insurance!

My first mortgage rate chart highlights monthly payments at different rates for 30-year mortgages, with loan amounts ranging from $100,000 to $1 million.

I went with a bottom of 3.5%, seeing that mortgage interest rates were around that level recently, and generally don’t seem to go any lower than that. Well, maybe they will…one can hope.

There is certainly the possibility that fixed rates could drift back in that direction with all the trade war uncertainty and the election year on the horizon.

Regardless, one might be able to buy their rate down to around that price, assuming they want an even lower rate on their home mortgage.

For the high-end, I set interest rates at 6%, which is where 30-year fixed mortgage rates were for many years leading up to the mortgage crisis.

With any luck, they won’t return there anytime soon…though in time they could potentially surpass those levels. Eek!

Yep, they could rise even higher over time depending on what transpires in the mortgage market, but hopefully home loan rates won’t climb back to the double-digits last seen in February 1990.

That fear aside, this mortgage payment chart should give you a quick idea of the difference in monthly payments across a range of mortgage rates and loan amounts, which should save some time fooling around with a mortgage calculator.

It should also make your job easier when you compare rates from different lenders. Or when you compare your current mortgage rate to what’s being offered today.

For the record, you can use the 30-year chart above for adjustable-rate mortgages too because they’re based on the same 30-year loan term. They just don’t offer fixed rates beyond the initial teaser rate offered.

So if you’re looking at a 5/1 ARM, you can still use this chart, just know that your interest rate will adjust after those first five years are up, and the chart will no longer do you any good.

That is, unless you’re looking to refinance your mortgage to a new low rate to avoid the interest rate adjustment.

Tip: Use the charts to quickly determine the impact of a higher or lower credit score on rates. If you’re told you can get a rate of 4% with a 760 credit score or a rate of 4.5% with a 660 score, you’ll know how much marginal or bad credit can really cost.

15-Year Mortgage Rates Chart

15 Year Fixed Mortgage Payment Chart

Click to enlarge

  • The 15-year mortgage rates chart helps illustrate the massive cost difference of a shorter-term mortgage relative to a 30-year mortgage
  • Use it to determine the capability of making larger monthly payments at various loan amounts
  • And also to see if refinancing makes sense at certain interest rates
  • While payments are significantly higher, you can save a ton of money on interest while paying off your home loan in half the time

Now let’s take a look at my mortgage rates chart for 15-year fixed mortgages, which are also fairly popular, but a lot less affordable.

I used a floor of 3% and a max rate of 5.50%.  Again, rates can and probably will climb higher, just hopefully not anytime soon. Spoiler alert: They drifted lower, but not much lower than 3%.

For the record, you can obtain mortgage rates at every eighth of a percent, so it’s also possible to get a rate of 3.625%, 3.875%, 4.125%, 4.375%, and so on.

But for the sake of simplicity, I spaced it every quarter of a percent except for the jump from 5% to 5.5%.

These charts are really just a quick reference guide to get ballpark monthly mortgage payment amounts if you’re just beginning to dip your toes in the real estate pool.

If you’re getting serious about home buying or looking to refinance an existing mortgage, whip out a loan calculator to get the exact PITI payment.

Some Interesting Takeaways from the Mortgage Rate Charts

  • Monthly payment differences are larger when interest rates are higher
  • Higher mortgage rates may be worse than larger loan amounts
  • Small loan amounts are less affected by interest rate movement
  • Those with smaller loan amounts have a higher likelihood of affording 15-year payments

The lower the interest rate, the smaller the difference in monthly payment. As rates move higher, the difference in payment becomes more substantial. Something to consider if you’re looking to pay mortgage discount points.

If you look at the 30-year mortgage rate chart, the monthly payment difference on a $500,000 loan amount between a rate of 3.5% and 3.75% is $70.36, compared to a difference of $77.93 for a rate of 5.25% vs. 5.5%.

Additionally, higher mortgage rates can be more damaging than larger loan amounts. Again using the 30-year mortgage rates chart, the payment on a $400,000 loan amount at 3.50% is actually cheaper than the payment on a $300,000 loan at 6%.

So you can see where an individual who purchases a home while mortgage rates are super low can actually enjoy a lower mortgage payment than someone who buys when home prices are lower.

However, for someone purchasing a really expensive home, upward interest rate movement will hurt them more than someone purchasing a cheaper home.

Sure, it’s somewhat relative, but it can be a one-two punch for the individual already stretched buying the luxury home.

To illustrate, the difference between a rate of 5% and 5.25% for loan amounts of $300,000 and $900,000 is about $46 vs. $138, respectively.

Be Sure to Look at the Big (Payment) Picture

  • Most advertised mortgage payments only include principal and interest
  • There is a lot more that goes into a monthly housing payment
  • Including property taxes, homeowners insurance, HOA dues, PMI, and so on
  • Don’t buy more than you can afford without considering all of these items

Lastly, note that my mortgage payment graphs only list the principal and interest portion of the loan payment.

You may also be subject to paying mortgage insurance and/or impounds each month. Property taxes and homeowner’s insurance are also NOT included.

You’ll probably look at this chart and say, “Hey, I can get a much bigger mortgage than I thought.”  But beware, once all the other costs are factored in, your DTI ratio will probably come under attack, so tread cautiously.

And don’t forget all the maintenance and utilities that go into homeownership. Once you hire a gardener, pool guy, and run your A/C and/or heater nonstop, the costs might spiral out of control.

I referenced this problem in another post that focused on if mortgage calculators were accurate, in which I found that housing payments are often greatly underestimated.

So you might want to drop your loan amount by $100,000 if you think you can just get by, as those other costs will certainly play a role.

Oh, and if you want to nerd out a little bit (a lot), learn how mortgages are calculated using real math, not some fancy calculator that does it all for you.

Or just use my mortgage payment calculator and enjoy the simplicity of it all. The choice is yours.

Source: thetruthaboutmortgage.com

Is There Trouble Brewing in the Car Loan Market?

Roughly 26% of car buyers feel that they overpaid for their vehicle, according to a 2014 survey from TrueCar, Inc. That same survey admittedly also found consumers believe car dealers make about five times more profit on the sale of a new car than they actually do — but whether you truly paid too much for your now-old ride or you simply think you did, there are ways to save the next time you hit up a car dealership. For starters, the rates on auto loans are largely driven by your credit, so simply bolstering your credit score can potentially save you thousands of dollars over the life of your loan. Plus, it never hurts to comparison shop and negotiate when it comes to auto loans and the actual vehicle itself — you may be missing out on savings by doing one and not the other.

But First… How Much Car Can You Afford?

According to Credit.com contributor and car insurance comparison company TheZebra, automotive experts generally suggest auto loans not exceed 10% (if it’s just the loan) to 20% (if it’s the loan and related expenses like car insurance) of your gross monthly income. Of course, that’s a broad rule and every potential car owner is going to have to take a long, hard long at their finances and current debt levels to decide what they can, in fact, afford. Following these three simple cost-cutting steps can help you save big on your auto loan and next car purchase.

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1. Do a Credit Check

Not checking your credit before you start shopping for a car is a huge mistake. Because your auto loan rates are directly tied to your credit scores, even a small inaccuracy on your credit report could cost you. Before you start shopping for your dream car, take an hour to check all three of your credit reports and credit scores online. You need to check with all three major credit reporting agencies — Equifax, Experian and TransUnion — because you don’t know which one a lender will use for your application. If you have a credit score above 750, you can probably qualify for the best rates available and negotiate an excellent deal on your car. If your credit score is lower, see if you can give it a boost before you apply for a loan.

You can view two of your credit scores, along with your free credit report snapshot on Credit.com. The snapshot will pinpoint what your specific area of opportunities are and what steps you can take to improve. However, as a general rule of thumb, you can raise your credit score by disputing errors on your credit report, paying down high credit card debts and limiting new credit applications.

2. Shop Online

Unless you have a credit score in the 800s and can qualify for a 0% auto loan offer, you are probably not going to get the best deal on a loan from the dealership. Auto loan rates and fees offered by online auto lenders are usually a lot lower than the rates offered by dealership financing programs. Plus, you can shop and compare rates online without causing damaging inquiries to your credit report (provided you’re not formally applying for every offer you see). Most online lenders have calculators or rate guides that show you what rate you could receive based upon your credit score. (Note: Be sure to vet any lender, whether online or within a dealership, before taking them up on an offer.)

With many online loans, you fill out the application and receive an approval by email within a few hours. Then the lender mails you a check that is ready to be made out to the person or business selling the car. If you end up not buying a car or not using the loan, you toss the check (shredding it first, of course). Plus, the check from the lender usually specifies a certain price range (for example, $9,000-$10,000). This leaves you with some room for negotiating a lower price with the seller even after you have received your loan approval. Speaking of which …

3. Negotiate the Price

Many people may wind up overpaying for a car simply to avoid negotiating the price of a car with a salesperson. Luckily, the Internet makes negotiating with car dealers a whole lot easier. Before you start shopping, look up the listed price, invoice and MSRP of the car you want through an unbiased site like Kelley Blue Book and request free price quotes online. Armed with these facts, you’ll have an advantage over the salesperson when you start the negotiations. You should be able to save a couple hundred dollars, if not a few thousands, by negotiating with the car salesperson before you decide to buy.

Proving It

You may be thinking: This is all fine and dandy, but does it really add up to $3,000 in savings? Let’s crunch the numbers using this auto loan calculator.

According to data from Experian, the average interest rate on a new car loan for prime customers as of the last quarter of 2015 was 3.55%. The average rates on a new car for non-prime customers and subprime customers during that timeframe were 6.24% and 10.36%, respectively.

So, let’s say you wanted to buy a $16,000 car and had $1,000 saved for a down payment. If you chose a loan repayment period of 60 months, had a non-prime credit score (think just below 700), and got a loan through a dealership, you could receive about a 6.3% annual percentage rate (APR).

  • Dealership option: $292 a month – $17,525 total costs

However, if you checked your credit reports and scores before you applied and found a way to boost your score to prime (think around 750), your interest rate from the dealership could drop to about 3.5%.

  • Improved score: $273 a month – $16,373 total costs

You would have already saved $1,152 dollars, just by checking your credit reports! That’s a pretty good return on your investment. Next, you might be able to reduce your rate even more by shopping for a loan online with your new credit score of 750. Let’s suppose, for argument sake, you qualify for a 2.7% APR (the average interest rate for super-prime customers during the last quarter of 2015, according to Experian).

  • Online loan: $268 a month – $16,052 total costs

You would have saved almost $1,473 by working on your loan options using Step 1 and 2. Finally, if you went to negotiate with the salesperson you could probably make a deal with the seller to reduce the price of the car down to $14,000. In this case, you would only have to borrow $13,000 with your 2.7% APR loan from an online lender.

  • Negotiated deal: $232 a month – $13,912 total costs

Your total savings from following these three simple steps would equal $3,613 over the life of your auto loan!

Source: credit.com

How To Buy A Home With A Low Credit Score

July 23, 2019 Posted By: growth-rapidly Tag: Buying a house

Life is full of surprises. Just when you think you have everything figured out, a roadblock, like losing your job, presents itself. And a few months later you realize that you have missed on a few credit card payments.

When applying for a mortgage loan, mortgage lenders not only assess your ability to repay the loan, but they also review your credit report.

Click here to find the best mortgage lenders for low or bad credit score.

And if your credit report does not reveal a good credit score, then getting a mortgage loan to finance your property can be quite difficult. If you’ve found yourself in this situation, do not despair yet. There are a few things you can do to overcome a low credit score. Here are a few tips to get started:

1. Meet face-to-face with a lender and be transparent

When you have a low credit score and you have run out of time to fix it, one of your best options is to meet face-to-face with a lender and explain your situation.

Indeed, there are some lenders out there who are inclined to offer you a home loan despite bad credit after taking into consideration your unique circumstances.


LendingTree: A Better Way to Find A Mortgage

LendingTree.com is making getting a mortgage loan simpler, faster, and more accessible. Compare the best mortgage rates from multiple mortgage lenders all in one place and at the same time. LEARN MORE ON LENDINGTREE.COM >>>


Related Resources

When a lender runs your credit through a computer, you risk to be automatically rejected if you don’t meet the computer’s prerequisites.

But when you sit down with a lender and explain your poor credit, the lenders will be able to reach a deeper understanding on whether you are able to repay the loan.

So if you have a bad credit score, it’s best to be transparent and upfront about it.

2. Show that you have a full time, stable job.

Although your credit score is an essential lending requirement, it’s not the only thing a lender looks at.

Being able to show that you have a full time, stable job is another way to increase your chance of getting a loan even if you have a low credit score.

A good income will show that you’re able to make the payments on the loan despite a bad credit score.

Related: Apply for a Mortgage Loan Today

3. Have a bigger down payment.

A bigger down payment, say 20% + of the home purchase price, makes it more likely to get approved for a loan despite having a low credit score.

Furthermore, and more importantly, putting at least 20% down will allow you to avoid paying private mortgage insurance (“PMI”), which is an additional monthly payment you make on top of your monthly mortgage payments.

A PMI is a way to assure the lenders, that if you, as a borrower, default on the loan, the bank will be covered by mortgage insurance.


Feeling Overwhelmed With Your Finances?, You have options and there are steps you can take yourself. But if you feel you need a bit more guidance, simply speak with a financial advisor. SmartAsset’s free tool matches you with fiduciary advisors in your area in 5 minutes. If you are ready to meet your goals, get started with Smart Asset today.


4. Consider applying for an FHA loan.

Since you have a low credit score, you may assume that you have little to zero chance with a lender. But did you know that you still can get approved for an FHA loan?

Depending on the amount of money you’re seeking as there are limits, an FHA loan may be the right loan for you.

An FHA loan is loan that’s insured by the Federal Housing Administration. FHA Loans are very popular among first time home buyers because they require a much lower down payment (3.5%) and a very low credit score (580).

So if you have a low credit score of 580 and can meet the other FHA loan requirements, you should be able to a home loan.

Click here to compare FHA loan rates

For more information see: FHA Loan Requirements – Guidelines & Limits.

5. Avoid applying for more credit prior to loan approval.

A low credit score is itself not a good sign. But the more debt you’re applying to prior to seeking loan approval can significantly damage your file.

You see, every time you’re applying for a new credit, it can be a credit card, a car loan or a personal loan, it goes to your credit report. And the more inquiries you have on your credit report raises a red flag that you’re experiencing financial difficulty.

These are just a few tips to consider when shopping for a home loan with a low credit score.

Tips to raise your credit score:

Although you still can get a loan despite having a low credit score, it’s not always the best decision. For one, it comes with higher interest rates.

So if you’re not in a rush, your best bet is to put buying a house on hold and work on improving your credit score. Here are a few tips to improve your credit score. For more information, read: How To Raise Your Credit Score To 850.

Always pay your bills on time and in full. Payment history accounts for 35% of your total credit score. So whether it’s a credit card or a phone bill, stay on top of these payments

Keep your credit card utilization rate below 30 percent if your total balance.

Be stable. One thing that may make you a low risk borrower before a lender’s eyes is having a stable job. Lenders love stability. So if you have been with your current job for a while, that will work in your favor.

Get a credit card if you don’t have one. You may think having a new credit card may hurt you, but it can actually help you if you’re able to manage it properly.

Click here to compare mortgage rates through LendingTree. It’s completely FREE

Related Articles:

5 Signs You’re Not Ready To Buy A House

Top 6 Home Buying Risks To Avoid

The Biggest Mistakes Millennials Make When Buying A House

How Much House Can I afford

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Not All Mortgage Lenders Are Created Equally

When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>

Source: growthrapidly.com

What Is a Prime vs. Subprime Credit Score?

When it comes to credit, approval is all in the number—the three-digit number that’s your credit score. Most lenders and credit card issuers use this number to determine your risk level as a borrower. In general, credit scores are categorized as bad, poor, fair, good, good or excellent.

However, another important designation impacts whether you’ll get approved for a credit card or loan, the interest rate you pay and your terms. That’s the prime vs. subprime credit score designation. Really, It’s no different than bad, poor, fair, good, good or excellent, it just used different terminology.

Subprime encompasses bad, fair and poor credit. Prime covers good and excellent. And sometimes superprime is used to encompass the top tier of excellent. Table 1 shows how that breaks down.

Table 1: Credit scores, ranges and prime vs subprime designations

VantageScore  Score VantageScore Rating FICO Score FICO Rating Prime vs Subprime Designation
750-850 Excellent 800-850 Exceptional Superprime (800+)
740-799 Very Good Prime (750-799)
700-749 Good 670-739 Good Prime
650-699 Fair 580-699 Fair
600-649 Poor Prime (620+)

Supbrime (< 619)

300-599 Bad 300-579 Very Poor Subprime

Learn more about VantageScore vs FICO.

Prime and superprime borrowers are more likely to qualify for credit cards and loans and access better interest rates, terms and perks, such as rewards, including points and cash back. That said though, there are credit cards for people with poor credit, bad credit and even no credit.

Is My Score Prime or Subprime?

Although each lender has its own criteria about which scores it considers prime and which scores it considers subprime, generally, you need a score of at least 740 to be considered a good risk by lenders. Scores of 620 to 799 are usually considered prime. Scores below 620 are subprime. And individuals with superprime scores have scores that exceed 800.

The Fair Isaac Corporation, the inventor of FICO scores, releases periodic data about score distribution among United States consumers. Recent FICO score data, released in January 2020, gives the following breakdown of prime vs subprime credit scores in 2019:

  • 16% of Americans have a very poor credit score (300-579).
  • 18% of Americans have a fair credit score (580-669).
  • 21% of Americans have a good credit score (670-739).
  • 25% of Americans have a very good credit score (740-799).
  • 20% of Americans have an exceptional credit score (800-850).

If you’re wondering where you sit, you can get your free VantageScore credit score from Experian here on Credit.com.

What Are the Effects of Prime vs. Subprime Credit?

A prime credit score makes it much easier and more affordable to get a credit card—especially if you want a rewards credit card—purchase a home, buy a new car or finance home repairs or higher education.

A subprime credit score can make it more difficult to qualify for a credit card or loan. And if you do, you’ll likely end up paying a higher interest rate for the card or loan.

When you improve your credit score and get into the prime or super prime category, you get lower interest rates, higher loan amounts and credit lines and even special programs like rewards credit cards, low APR credit cards and sign-up bonuses like and 0% APR on purchases and balance transfers.

Subprime borrowers sometimes have to take additional steps to be approved for a loan. For example, a cosigner with good credit can improve your chances to qualify. However, he or she is responsible for payments if you default on the cosigned credit card or loan. If you’re buying a home or a car, the lender may require a higher down payment than it does for a prime borrower.

Although interest rates for a prime vs subprime credit score vary dramatically depending on the type of loan and the lender, you could pay tens of thousands less over the life of the loan if you have prime vs subprime credit score. For example, a subprime auto loan can have an interest rate of 10% or higher, while prime lenders can access rates of less than 5% or even 0% with special financing.

A credit card for subprime borrowers can carry an interest rate of more than 25%, compared to less than 10% or even an introductory rate of 0% for a prime or superprime credit score.

According to the federal Consumer Financial Protection Bureau, subprime mortgages are more likely to have an adjustable interest rate, which means your interest and monthly payment amount can increase over time. Prime mortgages are more likely to carry a fixed rate.

Keep in mind that a prime credit score isn’t necessarily a one-way ticket to loan approval. While lenders take your credit scores into account, they also consider factors like income, debt utilization and overall finances when deciding whether to extend you credit or a loan.

What Factors Impact My Score?

If your credit score falls into the subprime range, your credit history might not be long enough for lenders to make an astute judgment about your ability to repay a loan. Using credit responsibly by making payments on time and keeping a low balance on the cards you do have may slowly improve your score.

Other common characteristics of subprime borrowers include:

  • A high credit utilization ratiowhich is the amount of your available credit you’re currently using. Lenders generally like to see a ratio of less than 30% with 10% being ideal.
  • A history of late payments—Most lenders report late payments to the three major credit bureaus after 30 days, with additional reporting at 60 and 90 days late.
  • A history of defaulting on debt—These debts may be written off by the lender because they were not repaid after several years or sent to collections.
  • A history of legal judgments or bankruptcy—These are seen as serious black marks by lenders and remain on your credit report for seven to 10 years.

Learn more about “What Is a Good Credit Score?” and “Just How Bad Is My Credit Score?”

How Can I Improve My Credit Score?

Moving from the subprime to prime credit score category has distinct benefits that put you on the path to a brighter financial future. You may be able to buy a home instead of renting. If you lease, you’ll have a better selection of properties to choose from. You’ll have lower interest rates on everything from your mortgage to your car loan to your credit cards, which means you’ll spend less money on monthly payments and more to put toward repaying debt, savings and meeting other financial goals.

Whether you’re working to exceed the 740 credit score threshold or want to maintain your already excellent score and become a superprime borrower, try these tips to improve your score:

  • Check your credit report and scoreIf you don’t know where you stand when it comes to prime vs subprime credit, you can’t be able to take steps to boost your rating.
  • Dispute any inaccuracies on your credit report that could be affecting your score.
  • Set up automatic payment reminders through your financial institution or on your phone or email calendar. You can receive a text or email so that you never miss a payment, helping you avoid late fees and dings to your credit score.
  • Pay down some of your debt to improve your credit utilization ratio. Lenders like to see borrowers using no more than 30% of your available credit. If you’re able to do so, opening a new line of credit will improve your utilization and subsequently, your credit score.
  • If you’ve missed payments in the past, bring those accounts current to improve your account standing, especially if some items have gone to collections. Once that happens, the black mark will remain on your credit report for seven years even if you eventually pay.
  • Keep old accounts open. The length of your credit history contributes to a healthy score, so even if you’re no longer using a card you avoid closing it.
  • Avoid applying for too many accounts in a short period of time. Lenders may see this as a red flag and the resulting hard inquiries have a negative impact on your score.
  • Create a budget and expenses you can eliminate or reduce to repay your debt. This not only boosts your score but also puts you on track to reach other financial goals—like building an emergency fund.

Learn more about how to improve your credit score.

Source: credit.com

Auto Loan Debt Tops $1 Trillion

This Article was Updated July 5, 2018

When you are looking to buy a vehicle, the first thing you should do is apply for a preapproved loan. The loan process can seem daunting, but it’s easier than you think and getting preapproval prior to going to the car dealer may help alleviate a lot of frustration along the way.

Here are five steps for getting a car loan.

  1. Check Your Credit
  2. Know Your Budget
  3. Determine How Much You Can Afford
  4. Get Preapproved
  5. Go Shopping

1. Check Your Credit

Before you shop for a loan, check your credit report. The better your credit, the cheaper it is to borrow money and secure auto financing. With a higher credit score and a better credit history, you may be entitled to lower loan interest rates, and you may also qualify for lower auto insurance premiums.

Review your credit report to look for unusual activity. Dispute errors such as incorrect balances or late payments on your credit report. If you have a lower credit score and would like to give it a bit of a boost before car shopping, pay off credit card balances or smaller loans.

If your credit score is low, don’t fret. A lower score won’t prevent you from getting a loan. But depending on your score, you may end up paying a higher interest rate. If you have a low credit score and want to shoot for lower interest rates, take some time to improve your credit score before you apply for loans or attempt to secure any other auto financing.

2. Know Your Budget

Having a budget and knowing how much of a car payment you can afford is essential. You want to be sure your car payment fits in line with your other financial goals. Yes, you may be able to cover $400 a month, but that amount may take away from your monthly savings goal.

If you don’t already have a budget, start with your monthly income after taxes and subtract your usual monthly expenses and how much you plan to put in savings each month. For bills that don’t come every month, such as Amazon Prime or Xbox Live, take the yearly charge and divide it by 12. Then add the result to your monthly budget. If you’re worried, you spend too much each month, find simple ways to whittle your budget down.

You’ll also want to plan ahead for new car costs, such as vehicle registration and auto insurance, and regular car maintenance, such as oil changes and basic repairs. By knowing your budget and what to expect, you can easily see how much room you have for a car payment.

3. Determine How Much You Can Afford

Once you understand where you are financially, you can decide on a reasonable monthly car payment. For many, a good rule of thumb is to not spend more than 10% of your take-home income on a vehicle. In other words, if you make $60,000 after taxes a year, you shouldn’t spend more than $500 per month on car payments. But depending on your budget, you may be better off with a lower payment.

With a payment in mind, you can use an auto loan calculator to figure out the largest loan you can afford. Simply enter in the monthly payment you’d like, the interest rate, and the loan period. And remember that making a larger down payment can reduce your monthly payment. You can also use an auto loan calculator to break down a total loan amount into monthly payments.

You’ll also want to think about how long you’d like to pay off your loan. Car loan terms are normally three, four, five, or six years long. With a longer loan period, you’ll have lower monthly payments. But beware—a lengthy car loan term can have a negative effect on your finances. First, you’ll spend more on the total price of the vehicle by paying more interest. Second, you may be upside down on the loan for a larger chunk of time, meaning you owe more than the car is actually worth.

4. Get Preapproved

Before you ever set foot on a car lot, you’ll want to be preapproved for a car loan. Research potential loans and then compare the terms, lengths of time, and interest rates to find the best deal. A great place to shop for a car loan is at your local bank or credit union. But don’t stop there—look online too. The loan with the best terms, interest rate, and loan amount will be the one you want to get preapproved for. Just know that preapproved loans only last for a certain amount of time, so it’s best to get preapproved when you’re nearly ready to shop for a car.

However, when you apply, the lender will run a credit check—which will lower your credit score slightly—so you’ll want to keep all your loan applications within a 14-day period. That way, the many credit checks will only show as one inquiry instead of multiple ones.

Get matched with a personal loan that’s right for you today.

Learn more

When you’re preapproved, the lender decides if you’re eligible and how much you’re eligible for. They’ll also tell you what interest rate you qualify for, so you’ll know what you have to work with before you even walk into a dealership. But keep in mind that preapproved loans aren’t the same as final auto loans. Depending on the car you buy, your final loan could be less than what you were preapproved for.

In most cases, if you secure a pre-approved loan, you shouldn’t have any problems getting a final loan. But being preapproved doesn’t mean you’ll automatically receive a loan when the time comes. Factors such as the info you provided or whether or not the lender agrees on the value of the car can affect the final loan approval. It’s never a deal until it’s a done deal.

If you can’t get preapproved, don’t abandon all hope. You could also try making a larger down payment to reduce the amount you are borrowing, or you could ask someone to cosign on the loan. If you ask someone to cosign, take it seriously. By doing so, you are asking them to put their credit on the line for you and repay the loan if you can’t.

When co-signing a car loan, they do not acquire any rights to the vehicle. They are simply stating that they have agreed to become obligated to repay the total amount of the loan if you were to default or found that you were unable to pay.

Co-signing a car loan is more like an additional form of insurance (or reassurance) for the lender that the debt will be paid no matter what.

Usually, a person with bad credit or less-than-perfect credit may require the assistance of a co-signer for their auto financing and loan.

5. Go Shopping

Now you’re ready to look for a new ride. Put in a little time for research and find cars that are known to be reliable and fit into your budget. You’ll also want to consider size, color, gas mileage, and extra features. Use resources like Consumer Reports to read reviews and get an idea of which cars may be best for you.

Once you have narrowed down the car you are interested in, investigate how much it’s worth, so you aren’t accidentally duped. Sites such as Kelley Blue Book or Edmunds can help you figure out the going rate for your ideal car. After you’re armed with this information, compare prices at different car dealerships in your area. And don’t forget to check dealer incentives and rebates to get the best possible price.

By following these steps, you’ll be ready to make the best financial decision when getting a car loan. Even if you aren’t ready to buy a car right now, it doesn’t hurt to be prepared. Start by acquiring a free copy of your credit summary.

It is always a good idea to pull your credit reports each year, so you can make sure they are as accurate as they should be. If you find any mistakes, be sure to dispute them with the proper credit bureau. Remember, each credit report may differ, so it is best to acquire all three.
If you want to know what your credit is before purchasing a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: istock

Source: credit.com

Should I Take Out A Loan To Pay Off My Credit Cards?

Should I take out a loan to pay off my credit cards? This is a question many people are asking.

How to Get Out of Debt - Should I take out a loan to pay off my credit cards

How to Get Out of Debt - Should I take out a loan to pay off my credit cards

Anyone who has ever had credit card debt knows these two things: It’s expensive, and it can take forever to pay off.

You can save a lot of time and money by increasing the amount of money you pay toward the debt every month.  This when where a credit card payoff calculator can help.  However, that is not the  only way to reduce the cost of getting out of credit card debt. You could also use a personal loan to consolidate your balances.

Personal loans often have lower interest rates than credit cards. Credit cards also tend to have variable interest rates. This can make paying down the balances a little less predictable. However, if you have a personal loan, it will generally have a fixed rate.

On top of that, people sometimes struggle to pay off debt while continuing to use their credit cards. Since personal loans are installment loans, you can’t add transactions to them.  This can make it easier to work towards your goal of getting out of debt.

Personal loans can also be extremely helpful for people whose credit card debt involves multiple cards. By paying off all your credit card debt with the personal loan, you make the debt easier to manage with a single payment and a single interest rate.

Keep in mind you have to apply for a personal loan, which will result in a hard inquiry on your credit report and a slight ding in your credit scores, and the better your credit score is, the better your interest rate on your personal loan will likely be. Interest rates and loan approval also depends on how much much you’re asking to borrow and your ability to repay the loan (like your income or other debt obligations you have).

Before you apply for a loan to consolidate your credit card debt, get an idea of where your credit stands: You can get a free credit report summary, updated every 30 days, on Credit.com. That summary will show you an aspect of your credit scores called “account mix” and if you happen to have no open installment loans, a debt consolidation loan could actually help you in that area.

Personal loans aren’t the only strategy for paying off credit card debt. You might also want to consider a balance transfer (here’s an expert guide to picking a balance transfer credit card), which can give you some breathing room from your debt during a promotional period of 0% interest. Again, you’ll want to check your credit and consider the balance transfer fees involved before applying.

More from Credit.com

This article originally appeared on Credit.com.

More by Christine DiGangi

Source: pennypinchinmom.com

Amerifirst Financial Review: They Take Home Purchase Lending Seriously

Posted on February 24th, 2021

It’s not every day you come across a large-scale independent mortgage lender that has been around since the 1980s, but Amerifirst Financial Inc. fits that description.

The Arizona-based company understands that there’s more to the mortgage business than just refinances, which is why their goal is to be the lender of choice for real estate professionals in all the markets they serve.

This could be a pretty smart strategy if and when interest rates rise and the pool of eligible refinance candidates begins to run dry.

If you’re thinking about buying a home, Amerifirst could be good choice for your financing needs since they’re heavily focused on purchase loans. Let’s discover more about them.

Amerifirst Financial Fast Facts

  • Direct-to-consumer retail mortgage lender
  • Founded in 1989, headquartered Mesa, Arizona
  • Offers home purchase financing and mortgage refinances
  • Funded more than $2 billion in home loans last year
  • Most active in Arizona, Colorado, and California
  • Licensed to do business in 43 states and the District of Columbia
  • Also operate several DBAs including AFI Mortgage, Spire Financial, and Truly Mortgage

Amerifirst Financial Inc. is a direct-to-consumer retail mortgage lender, meaning they operate a call center along with branches throughout the country.

The company was founded all the way back in 1989 and is headquartered in Mesa, Arizona, which is just east of Phoenix.

They also have branches in nine states, including Arizona, California, Colorado, Florida, Mississippi, Nevada, Oregon, Texas, and Utah.

Amerifirst appears to specialize in home purchase financing, with roughly two-thirds of total volume dedicated to home buyers.

The rest can be attributed to mortgage refinances, including rate and term refinances and cash out refinances.

Last year, the company funded more than $2 billion in home loans, with nearly a billion in their home state of Arizona.

They’re also very active in Colorado and California, and have a decent presence in Nevada and Texas as well.

While they’re licensed in most states nationally, they don’t seem to be available in Delaware, Hawaii, Maine, New York, Rhode Island, Vermont, or West Virginia.

How to Apply with Amerifirst Financial

  • You can get started instantly by visiting their website and clicking “Apply Now”
  • They offer a digital mortgage application powered by ICE that lets you complete most tasks on your own
  • It’s also possible to browse their online loan officer (or branch) directory first to find someone to work with nearby
  • Once your loan is submitted you can manage it 24/7 via the online borrower portal

Amerifirst Financial makes it super easy to get started on your home loan application.

Simply head to their website and click on the big “Apply Now” button and you’ll be off to the races.

That will take you to their digital mortgage application powered by ICE that lets you input all your personal and financial details electronically.

Then you can link financial accounts using your credentials to avoid having to scan/upload or track down your documents.

Additionally, you can order your own credit report and eSign disclosures to speed through the more painstaking part of the process in a matter of minutes.

Once your loan is submitted and approved, you’ll receive a to-do list with any conditions that must be met to get to the finish line.

You’ll also be able to track and manage your loan via the online borrower portal, and get in touch with your lending team if and when you have questions.

Those who prefer a more human touch can also visit a local branch and/or browse the online loan officer directory to learn more about the individuals who work there.

It may also be advisable to speak with a loan officer first to discuss loan pricing and available loan programs, then proceed to the online mortgage application.

In any case, they make it really simple to apply for a mortgage and manage your loan from start to finish thanks to the latest technology.

Protect Your Transaction Pre-Approval for Home Buyers

Protect Your Transaction

One perk to using Amerifirst Financial, especially if you’re buying a home in a competitive market, is their “Protect Your Transaction” loan commitment.

It goes beyond both a pre-qualification and pre-approval in that it’s underwritten upfront by a real human loan underwriter.

In fact, the PYT even comes with monetary assurance (up to $15,000, with an additional $5,000 for first responders and teachers), which represents their belief in the strength of your application.

So if the loan falls through and it turns out to be the lender’s fault, you could be entitled to that cash, which can also be shared with the seller. This may strengthen your offer.

Next to a cash offer, they believe it provides the greatest assurance that they can provide financing for your home purchase.

And that could just be enough to give you edge versus other home buyers on a hot home.

It may also give you peace of mind in the process, knowing you can actually get financing when all is said and done.

Loan Programs Offered by Amerifirst Financial

  • Home purchase loans
  • Refinance loans: rate and term, cash out, streamline
  • Conforming home loans
  • High-balance and jumbo home loans
  • FHA/USDA/VA loans
  • Down payment assistance
  • Green Value Mortgage
  • Fixed-rate and adjustable-rate options available

Amerifirst Financial offers both home purchase loans and refinance loans, including rate and term, cash out, and streamline refinances.

You can get financing on a primary residence, including townhomes/condos, along with a vacation home or 1-4 unit investment property.

They offer all the popular loan types, including conforming loans backed by Fannie Mae and Freddie Mac, high-balance and jumbo loans, and government-backed options like FHA, USDA, and VA loans.

They also offer an exclusive loan program known as the “Green Value Mortgage” that offers a reduced interest rate, fees, and discounted mortgage insurance if your property has a green score of 75 or lower.

You may also be eligible to receive up to 3.5% of the purchase price as a non-repayable gift. All the more reason to go green!

In terms of loan programs, you can get either a fixed-rate mortgage such as a 30-year or 15-year fixed, or an adjustable-rate mortgage like a 7/1 or 5/1 ARM.

Amerifirst Financial Mortgage Rates

One slight negative to Amerifirst Financial is the fact that they don’t mention their mortgage rates anywhere on their website.

As such, we don’t have any clues about their loan pricing relative to other banks and lenders out there.

The same goes for lender fees, which aren’t clearly listed on their website to my knowledge.

This means you’ll need to get in touch with a loan officer to discuss rates and fees to ensure they are competitively priced.

Be sure to compare their rates/fees with other lenders before you proceed to the application if you want peace of mind on pricing front.

Customer service and competence is always important, especially when it comes to a home loan, but so is cost.

Amerifirst Financial Reviews

On Zillow, Amerifirst has a very impressive 4.98-star rating out of 5 from roughly 900 customer reviews, which is quite impressive given the volume of feedback.

On LendingTree, they have a perfect 5-star rating, though it’s based on just about 30 reviews. They also have a 100% recommended score there.

If you’re looking for more reviews, you can also check out local ones on Google for their brick-and-mortar branches nearest you.

Lastly, the company is Better Business Bureau accredited, and has been since 2014. They currently enjoy an ‘A+’ rating based on complaint history.

To sum it up, Amerifirst Financial could be a solid choice for someone purchasing a home (especially a first-time buyer) thanks to their robust Protect Your Transaction loan approval and variety of down payment assistance programs.

Amerifirst Financial Pros and Cons

The Good

  • You can apply for a home loan from any device in minutes
  • Offer a digital mortgage application powered by ICE
  • Lots of loan programs to choose from
  • Discounts for those who purchase a green home
  • Protect Your Transaction loan approval for home buyers
  • Excellent customer reviews from former customers
  • A+ BBB rating, accredited business since 2014
  • Free mortgage calculators and mortgage dictionary on site

The Not

  • Not available in all states currently
  • Do not list mortgage rates or lender fees on their website

(photo: nathanmac87)

Source: thetruthaboutmortgage.com

‘How Can We Catch Up?’ Mortgage Denials Stack the Deck Against Black and Hispanic Buyers

The American dream of homeownership is not an equal opportunity ambition.

Black and Hispanic home buyers are more frequently denied mortgages than white buyers—even when their financial pictures are similar, according to a realtor.com® analysis of 2019 mortgage data. When they are able to secure mortgages, Black and Hispanic borrowers are more likely to pay higher fees and interest rates on their loans than white and Asian borrowers.

“What we call it in my community is the ‘Black tax,'” says Donnell Williams. He is president of the National Association of Real Estate Brokers, an organization for Black real estate professionals, and a broker with Destiny Realty in Morristown, NJ.

“Even if we have a college degree, we’re still getting the same treatment as a white high-school dropout,” he says.

Black buyers were twice as likely to be refused mortgages than whites, according to the realtor.com analysis of 7.2 million loan applications in 2019. Only about 5.5% of whites had their loan applications rejected, compared with 6.8% of Asians, 9.3% of Hispanics, 11.7% of Blacks, and 10.8% of multi-minority race individuals hoping to be approved. These denials were only for applicants where all the data was available for fully completed applications that weren’t withdrawn.

Decades of discrimination against people of color have resulted in lower homeownership rates among minorities than among whites in America. And that has a deep, long-term impact on wide swaths of America, since homeownership is traditionally how generations have catapulted themselves into the middle class, as their properties appreciate in value over time.

Nearly three-quarters of whites, 74.5%, owned their homes in the last quarter of 2020, according to a quarterly report from the U.S. Census Bureau. However, just 44.1% of Blacks, 49.1% of Hispanics, and 59.5% of Asians were homeowners in the last three months of the year.

“There are a lot of obstacles that are working against buyers of color,” says Brett Theodos, a senior fellow at Urban Institute, a nonpartisan research group based in Washington, DC.

On top of racial discrimination, “they’re less likely to get help with the down payment from the bank of Mom and Dad,” says Theodos. “They’ve also [often] entered adulthood with higher student loan debt, less inheritance, and are on average in professions that earn lower wages.”

Many of these problems took root generations ago. Whites who served in World War II were offered low-cost mortgages for single-family homes in newly built suburbs when they returned. Blacks and other minorities were often denied access to these loans. In many cases, Blacks, in particular, were explicitly barred from living in white communities through a toxic combination of racial covenants written in deeds and government-supported redlining.

Black Americans, like these Tuskegee Airmen, served their country in World War II but returned home to face discrimination.
Black Americans, like these Tuskegee Airmen, served their country in World War II but returned home to face discrimination.

Bettmann/Getty Images

So Blacks who wanted to become homeowners often had to buy homes at inflated prices in less desirable areas. If they were able to get mortgages at all, they typically paid more for them. And homes in these areas haven’t appreciated nearly as much as homes in white areas, except in the places that have seen significant gentrification. As homeownership is used to catapult folks into the middle class and build wealth, that’s left many minorities with less money to pass down to future generations in the form of college tuition assistance or a down payment.

“How can we catch up? How can we be on par? We didn’t have that head start of generational wealth,” laments the National Association of Real Estate Brokers’ Williams. “You want a piece of the American dream, and it’s hard. You feel like your efforts are in vain.”

Realtor.com took a hard look at which races are most likely to be denied mortgages and the reasons provided for those rejections as well as who is paying the most for those loans. To do so, we analyzed 2019 mortgage application data available through the Home Mortgage Disclosure Act. The act, passed in 1975, requires most larger lenders to collect mortgage data and make it public. We looked at only first-lien mortgages on purchases of one- to four-family homes built on site, so manufactured homes wouldn’t be included.

When possible, we compared borrowers with similar financial profiles to see who was getting loans—and who wasn’t. However, our analysis doesn’t take into account certain discrepancies like credit scores.

Blacks most likely to be denied mortgages—even with good-sized down payments

According to our analysis, even aspiring home buyers of color with sizable down payments are more likely to be denied mortgages.

Black borrowers with 10% to 20% to put down were more than twice as likely to be denied than whites offering the same down payments. Lenders rejected 6% of whites and 9% of Asians—compared with 11% of Hispanics and multi-minority race borrowers and 13% of Blacks.

These higher denial rates may be due to minority borrowers having lower credit scores, more debt, or some other financial black mark. But lending experts believe that racial discrimination also plays a part.

For example, a loan officer might tell white borrowers to improve their credit before submitting an application, be more understanding of alternative forms of income, such as a family member contributing or a side gig, or wait until mortgage rates fall a little so their monthly payment is lower. The latter would increase such borrowers’ shot at getting a loan. But a loan officer may not do the same for customers of color.

“Some of it is decisions being made by the lending officers,” says sociology professor Lincoln Quillian of Northwestern University in Evanston, IL. “They have powerful stereotypes of who is likely to repay loans.”

Black and Hispanic borrowers often pay more for their mortgages

Black and Hispanic borrowers were more likely to receive higher mortgage interest rates on their loans—which can add up to big money over time.

About 59% of white borrowers and 52% of Asian borrowers received rates within 1 percentage point of the best (i.e., lowest) possible rate. However, only 51% of multi-minority race borrowers, 47% of Hispanics, and 44% of Blacks fared as well. (It’s unknown whether some of these borrowers pre-paid or bought down their interest rates during the closing process.)

Even the smallest differences in rates can really add up. A single percentage point difference can lead to a larger monthly mortgage payment and tens of thousands of dollars more paid out over the life of a 30-year fixed-rate loan. (The exact difference depends on the purchase price of the home, the exact mortgage rates, and the size of the down payment.)

A recent study found that wealthier Blacks were given higher mortgage rates than low-income whites.

Black households making between $75,000 and $100,000 a year were saddled with a median 4.215% mortgage interest rate in 2019, according to a report from the Joint Center for Housing Studies at Harvard University. However white households earning $30,000 or less had a lower median mortgage rate of 4.16%. The study looked at 2019 U.S. Census Bureau data.

Even Black households raking in $100,000 a year or more paid slightly higher interest rates, 4.169%, than low-income whites. Whites with six-figure incomes had median 3.946% rates—about 22 basis points less than Blacks who were also earning $100,000 or more.

“We have some deep problems in the mortgage market,” Raheem Hanifa, a research analyst at the center who wrote the study.

“Some of the differences in mortgage [costs] is due to differences in who the lenders are. There’s evidence that Black and Hispanic buyers are more likely to be marketed to by lenders who are higher-cost,” says sociology professor Quillian. “White and Asian borrowers are more likely to go to traditional banks.”

Predatory lending and the proliferation of subprime mortgages doled out to communities of color led to the last housing crash, and plunged the world into a financial crisis more than a decade ago. But at least some of today’s pricier lenders may simply be smaller operations that need to charge more since they’re not dealing with the economies of scale of the bigger banks.

People of color more likely to be denied loans due to debt

Minorities are more likely to be denied mortgages due to their debt. Before deciding whether to grant loans, lenders look closely at potential borrowers’ debt loads. Their goal is to make sure borrowers can afford to pay back their credit card, student loan, car, and other payments—on top of a mortgage.

Only 1.6% of potential whites borrowers had their applications rejected because of their debt loads—compared with 2.5% of Asians, 3.1% of Hispanics, and 3.8% of Blacks. About 3.7% of multi-minority race applicants were also rejected.

While that does not sound like that much of a difference, it means that 1 in 64 white applicants is denied versus 1 in 26 Blacks.

Some minority borrowers may simply carry more debt than white borrowers. Many face discrimination in the workplace that can manifest in lower salaries and fewer promotions. Also, they may not receive the same level of financial help from their families when they get into a tough financial spot.

Black households were more than twice as likely to have student loan debt than white households, according to a recent report from the National Association of Realtors®. About 43% of Black households had student debt, at a median $40,000, compared with 21% of whites, at a median $30,000 in student debt. (The report was based on a survey of more than 8,200 home buyers who purchased a primary home from July 2019 to June 2020.)

Employment and credit histories also led to higher mortgage denial rates for minorities

Blacks and Hispanics were also more likely to be denied a loan due to their employment history. One in 568 white applicants was rejected due to their work history, compared with 1 in 282 Blacks.

“People of color, notably Native Americans, Blacks, and Hispanics, face higher rates of discrimination in hiring,” says the Urban Institute’s Theodos. “It can be more difficult to be promoted or advanced.”

That plays a big part in how much they’re earning. In 2019, Asian households had the highest median incomes of $98,174, followed by non-Hispanic white households at $76,057, according to U.S. Census Bureau data. Hispanic households had a median income of $56,113, while Black households brought in the least, at $45,438.

Blacks and Hispanics are also more likely to lose out on a loan due to their credit scores. About 0.6% of Asians and 1% of whites were denied due to their credit histories compared with 1.6% of Hispanics, 2.9% of Blacks, and 2.4% of multi-minority races.

Typically, people build good credit by paying off their student loans, car loans, and credit card bills on time each month. However, many lower-income Americans are less likely to have graduated from college or have credit cards. And what folks do pay every month—their rent, utility, and cellphone payments—often aren’t counted toward credit profiles.

“It’s not just discrimination today that is why we see denials at higher rates for Blacks and Hispanics. It’s the byproduct of generations of systemic racism,” says Theodos. “We have a long way to go in overcoming the deep, historical divide of opportunity for people of color in this country.”

Source: realtor.com