This is why managing your credit score is so important and a lesson on credit score can be worth six points in savings.
Answer: $312 per month or $112,241 over a 30-year term (typical term for home loans) which is the difference between the highest credit score (760-850) and the lowest (620-639). Click on image for interactive view.
Data as of 3/6/23:
Note: Assume 30 year fixed rate mortgage for $286,400
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questions:
What do you see about the relationship between a credit score and the interest rate on a mortgage? Why do you think lenders charge different interest rates depending on the credit score of the borrower? What do you think is one way to get a good credit score?
Here are prepared slides for today’s question that you can use in your classroom.
Behind the numbers (Bankrate):
Although it is up to specific lenders to determine what score borrowers need in order to offer them the lowest mortgage interest rates, a difference of only a few points on your credit score can sometimes affect your monthly payments substantially. Could For example, the difference between a 5.5 percent interest rate and a 6 percent rate on a $200,000 mortgage is $64 per month. This grows to $23,000 over the course of the 30-year mortgage term.
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NGPF’s arcade game, Shady Sam, helps students understand credit from a lender’s perspective.
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This is the third round of FinCap Friday Frenzy. Just follow these simple rules and your class could be earning virtual visits from Yanely and more!
About the author: Tim Ranzetta
Tim’s thrift habit began at the age of seven when a neighbor with a broken hip found him a job walking the dog. His recovery took about a year, as a result of which Tim became familiar with bank tellers (and accumulated a savings account of over $300!). His recent entrepreneurial exploits include driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies, and helping families make better college funding decisions. After volunteering in 2010 to create and teach the personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum that led him to found a new nonprofit, Next Gen. Inspired to start personal finance. ,