If you are buying a Gulfport home, be aware that your credit score can affect the cost of a mortgage in a real and significant way. It is much better to know what your credit score is even before you begin shopping for a mortgage. Since a lower credit score means higher risk, borrowers with lower scores pay the price. In fact, the difference in just a 1/2 a point could mean the difference in almost $100,000 over the lifetime of a loan!
The below information will help you make a more educated decision when it comes to locking in on the right type of mortgage:
The Truth About FHA Loans
With two varieties of mortgage insurance, UFMIP, which stands for upfront mortgage insurance premium, financed over the life of the loan, and an additional monthly insurance premium, the lender is protected. Based on points, the result is that a homeowner might pay an additional higher amount monthly on a FHA loan. On a $400,000 loan, one might pay an extra $7,000 and a monthly amount of $450.
Conventional loans might seem to be less pricey. With a credit score that is below the 700 mark, your loan could very quickly get expensive. Because there is no upfront mortgage insurance premium as in the FHA loan, but a percentage premium based on the amount of the loan, higher risk borrowers may pay more. Your credit score and loan-to value-ratio are the two most important factors.
Mortgage Insurance Costs with a Conventional Loan
Based on the point system, a person with a credit score of 740 might pay $253 per month; another person with a score of 640 will pay $400 per month, based on their loan of $400,000. The person with the lower score could put more money down.
What are the Options
There are several factors to consider when seeking a mortgage for your next Gulfport real estate purchase:
- Credit score
- Down payment
- The need for more money down
- Affordable monthly payments
Cleaning up your credit is the first step; then seek help from a qualified real estate professional who can answer your questions about buying a Gulfport home. Call us at 228-275-7500 – we’re here to help and our knowledge is free to you!
Additional information you may want to read to help with your upcoming Gulfport home purchase include: