A TV news broadcast caught my attention recently. The consumer affairs/product test reporter produced a piece relating to credit scores. The segment dealt with three people and spent four weeks working on their credit scores. At the end of the four week test, all three had increased their FICO scores between 20 and 70 points. The participants had been coached by Al Bingham a loan officer with National City Mortgage out of Salt Lake City, Utah. Real estate in the Park City area is primarily second homes and vacation property. The majority of the home sales in Park City do not run into financing problems due to their secondary home nature, many are purchased for cash. There are however, many younger families and people in the area that do finance their primary residence here. Finding homes and condominiums in Park City that are affordable for the "average person" or the working class of Park City can be very challenging. A person's credit score can make the difference in monthly payments that can make or break a possible sale. Bingham's book The Road to 850 illustrates the cost of a credit score (not only in terms of a mortgage, but how it can affect other areas of our lives) and gives directions as how to make your score better. The chart below illustrates the monthly cost of a $200,000 mortgage in terms of monthly payment and the total cost over the full term of the loan.
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$200,000 Loan / 30 year Fixed Interest Rates | |||||||
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Range of Credit Scores |
Interest Rate |
Monthly Payments |
Extra Mo. Cost |
Total Extra Cost |
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760 to 850 |
6.33% |
$1,235 |
0 |
0 |
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700 to 759 |
6.55% |
$1,263 |
$18 |
$10,253 |
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680 to 699 |
6.73% |
$1,287 |
$52 |
$18,713 |
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660 to 679 |
6.95% |
$1,316 |
$81 |
$29,135 |
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640 to 659 |
7.38% |
$1,374 |
$139 |
$49,766 |
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620 to 639 |
7.92% |
$1,447 |
$212 |
$76,140 |
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