9 Tips to Save Thousands of Dollars on Your Mortgage

These simple moves can make a huge financial difference when shopping for a home loan.

1. Get your FICO score (free)

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Look at your credit score up to a year before you apply for a mortgage or start shopping for a home. FICO is the score used most often by the mortgage industry. There’s no need to pay to see it: Instead, read “8 Ways to Get Your FICO Score for Free.”

Raising your score makes you eligible for a better interest rate on a mortgage. It could take as long as a year to improve that score.

FICO (the Fair Isaac Corporation), the company that invented the score that bears its name, has a loan savings calculator that shows how much you can save by improving your credit score. The calculator displays six ranges of credit scores, from highest (760-850) to lowest (620-639). Alongside the scores are typical mortgage interest rates currently offered to borrowers with those scores.

We tried the calculator at the end of October. To borrow $300,000, for instance:

  • With a credit score in the highest range, you’d pay around 3.646 percent (APR), with a $1,372 monthly payment and total interest paid over the 30-year mortgage of $193,813.
  • With a credit score in the lowest range, you’d pay around 5.235 percent (APR), with a $1,654 monthly payment and total interest paid of $295,377.

How’s that for a money-saving difference? Having one of the highest credit scores shaves $282 a month off the mortgage payment compared with a score in the lowest bracket. The total bill for a bottom-rung credit score is more than $100,000 in extra interest paid over the life of the mortgage.

Try using the calculator yourself to see the savings differences at various credit score ranges. It’ll make you a believer.


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