All about Your Mortgage Payment
Very few homebuyers understand what determines their monthly mortgage payment. We'll explain how your payment is determined and how to minimize your costs.
Your Credit Score
Your ability to get low mortgage quotes will depend heavily on your credit score. The two most important aspects of your credit that lenders will examine are your credit report and your credit score. These two criteria will determine whether you qualify for a loan and, if so, what kind of interest rate you will receive. Your credit report will detail your payment on all of your financial accounts. It will tell your lender how much debt you have, if you pay on time, and how much of your credit capacity you are using. Your credit score is also important. When you get low mortgage quotes, you will likely not qualify for traditional mortgages unless you have a score above 620.
Down Payments
One way to get low mortgage quotes is to put up a large down payment. Often, though, the down payment represents the biggest barrier to homeownership for many consumers. Fortunately, many of our lenders are still willing to offer low mortgage quotes to borrowers who cannot make the traditional 20% down payment. In fact, depending on your credit score, some lenders are willing to write a mortgage loan with little to no down payment. Unless you make a 20% down payment, however, you will be stuck paying private mortgage insurance, which is an added expense to your monthly payments.
Private Mortgage Insurance
As explained before, your low mortgage quotes will increase if you have to pay for PMI, or private mortgage insurance. Private mortgage insurance protects lenders from your default when you make less than a 20% down payment. The cost of PMI varies, but it is usually 1/2 of 1% of the mortgage loan. The best way to guarantee low mortgage quotes is to make the recommended down payment of 20% to avoid this costly expense.
Points
Lenders can charge discount points or origination points that will both impact your low mortgage quotes. Most points amount to 1% of loan's amount. A lender might charge one, two, or even more points.
