Most of us know that a borrower’s mortgage payment is affected by their credit score. The question is by how much? Below are Principal and Interest payments for a $200,000 30 year Conventional fixed rate mortgage. Also included is the PMI payment assuming the same loan amount with 5% down.
CREDIT SCORE PRINCIPAL AND INTEREST PMI
780 4.125% $969 $68
720 4.25% $984 $118
680 4.375% $999 $177
660 4.5% $1028 $255
I recommend borrowers have their credit scores checked early on during the pre-approval process. This gives the lender time to make recommendations to improve borrower’s credit score if there are credit issues that need to be addressed. The lower the credit score, the higher the payment for both interest rate and PMI.