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 How does my credit score affect my loan?

On this week’s Joe Knows Mortgages MINUTE, we answer the question: How does my credit score affect my loan? Most loans have a risk-based pricing model. In other words, the loan is going to be priced according to the risk that the lender takes by making the loan. Through statistics, lenders have realized that loans with lower credit scores ultimately present a higher risk than those with higher credit scores. If you have a higher credit score, you will typically pay less for a loan than someone with a lower credit score.

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What is a Rate Lock Period?

A rate lock or a rate commitment is a lender’s promise to hold a specific interest rate and fee for you for a specific period of time while your application is being processed.

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What is a COE?

COE stands for “Certificate of Eligibility”. The COE verifies, to the lender, that you are eligible for a VA-backed loan

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What is the difference between Interest Rate and APR?

Annual Percentage Rate (APR) is also expressed as a percentage rate; however, it is a broader measure of the cost of borrowing the money. APR includes other charges and fees such as the interest rate, points, mortgage broker fees, and other charges that you pay to get the loan.

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