I was recently running some numbers on how to avoid PMI on my next mortgage and was shocked to realize how much a middling credit score was potentially costing me/my wife. Listed below is a table of PMI rates on a 30 year mortgage with varying credit scores(source):
| LTV | 760+ | 740-759 | 720-739 | 700-719 | 680-699 | 660-679 | 640-659 | 620-639 |
|---|---|---|---|---|---|---|---|---|
| 95% | .37 | .52 | .65 | .76 | .94 | 1.25 | 1.29 | 1.37 |
| 90% | .27 | .37 | .45 | .54 | .64 | .88 | .89 | .92 |
| 85% | .18 | .19 | .22 | .24 | .27 | .37 | .39 | .42 |
To look at the most extreme ends of the buying a spectrum a 200k home with 5% down an individual with a credit score of 760+ would pay ~$6000 in PMI versus an individual with a 620-639 credit score would pay ~$22000 in PMI(a difference of 16k). A borrower purchasing a 500k home with 5% down and a score of 760+ would pay ~$15000 in PMI versus an individual with a 620-639 credit score would pay ~$54000 in PMI(a difference of 39k). Now you might say it's ridiculous to have a borrower with a ~630 credit score and 5% down buying a 500k home and it absolutely is, but be mindful that when married couples file for a mortgage the lower of the two scores is used. Imagine a recently graduated doctor married to an individual with an unsavory credit score and while extremely unlikely it's still a possibility for the sake of the example.
Submitted June 04, 2018 at 02:45PM by RussianMachine4MVP https://ift.tt/2xHASIr
