Credit is one of the most important parts of the mortgage process. It doesn’t stand alone but it can have a big impact on the cost of your home for decades.
Let’s say you’re a homebuyer looking at a 30-year $250,000 mortgage. You have a credit score of 740 with 3% down. In today’s market, this can translate to a loan rate of 3%, and a payment of $1,055.11 a month. Mortgage insurance works out to $108 a month.
Now let’s say your credit isn’t as good. And you have a lower credit score of 660. This would cause a rate increase to 3.5%, and a payment of $1106.39. Mortgage Insurance would jump to $310 a month!
In just 5 years, the cost of your home went up $15,180 and $30,360 in 10 years. A higher rate can also stop you from buying the home you want if the new payment exceeds qualifying ratios. Watch our video on credit, get your scores up, and your debts down so you can get the home you want at the rate you deserve.