What effects the size of your intrest rate on a loan, such as a mortgage?

[coolred]

I was wondering what factors they take into consideration when picking an intrest rate. Say for instance the Primary loan holder has not the greatest credit, since they have a lot of outstanding debt, such as another loan and credit cards and what not. But then say that person gets a cosigner with a good to excellant credit rating. Do they still look at the primary persons credit, in conjunction with the cosigners, or just the cosigners, or just the primary loan holders? I can't imagine it being the last one, since then there would be no point in a cosigner. thanks

 

[sciencetoy]

Yes. They look at both.

If you have a really bad credit rating you can still get a mortgage somewhere, somehow, but it's going to cost you. You can, however, refinance when things get better.

If you have a really really bad credit rating (bankruptcy etc) or no credit rating at all, then you won't get a mortgage.

The cosigner's rating may get you a better interest rate in the first example, or may make it possible to get a loan in the second example.

 

[conjur]

Actually, you can even qualify for a mortgage as soon as 18 mos. after filing a bankruptcy. It won't be a very kind interest rate, though. I'm about to file that, myself, been trying to stave it off but that's just not going to happen.

But, I'll be 3-4 years out before I'm ready to get a house again (will build then).

 

[coolred]

Well I last checked my credit a year or more ago and I had a credit score in the 600's. I know thats pretty bad. But some of the reasons for it where:
Lack of credit info-I now have more credit, such as paying on my loan and using my credit cards, so I should have mroe of a history.
I also had a ton of outstanding debt-about 5 grand in credit debt and another 8 grand or so for a loan I have. I have paid of some of the loan, but not much, but I now have less then 2000.00 in credit card debt. I also had 1 payment 60 days past due, because I though my best buy card was paid off, when in actuallity I was just not getting a bill, must have got lost in the mail. I found out that when i paid it off I forgot about like a 2 dollar intrest charge, and that ended up costing me quite a bit in late charges, not to mention a worse credit rating. Other then that I pay my bills on time all the time. I haven't checked lately, although I do plan to check before mortgage shopping, but I would hope that I would at least be closer to a 700 credit score. And my cosigner should have a perfect payment record, and not too much outstanding debt. So I would expcect thier credit rating to be very high. Just trying to get an estimate on what my intrest rate would be.


Also what extra things do I need to consider paying that I wouldn't have had renting. I know property tax, plus water(since most rental places pay water) plus I need to have an emergency fund for repair and what not.