IMPACT OF CREDIT SCORES ON MORTGAGE RATES IN TUCSON

I JUST FINISHED AN ANALYSIS FOR A PRESENTATION TOMORROW ON WHAT IS THE IMPACT OF A CREDIT SCORE ON A 30 YEAR FIXED RATE LOAN. THE RESULTS SHOW IT REALLY PAYS TO HAVE THE BEST CREDIT YOU CAN WHEN APPLYING FOR A MORTGAGE- WHETHER IT IS A PURCHASE MONEY MORTGAGE OR A REFINANCE.   THESE ARE INDICATIVE RATES, ASSUMING A $200,000, NO CASH OUT REFINANCE ON A 70% LOAN TO VALUE TRANSACTION.  THE APR IS NOT LISTED BECAUSE THE PURPOSE IS TO SHOW ONLY THE IMPACT OF CREDIT ON THE RATE. CLOSING COSTS WOULD BE BASICALLY THE SAME REGARDLESS OF CREDIT.  I HAVE ACCESS TO A NUMBER OF LENDERS, BUT THE ILLUSTRATION BELOW USES THE RATES OF ONE LENDER WHO WILL APPROVE A LOAN IF THE CREDIT SCORE IS AT LEAST 660.  LOWER THAN THAT, THE BORROWER IS PROBABLY BEST OFF USING AN FHA OR VA LOAN.

SCORE           RATE                            RATE WITH NO POINTS

                     1% DISCOUNT         (NO DISCOUNT OR ORIGINATION)       

660               5.375                                5.875

680               5.25                                  5.625

720               5.125                                 5.375

760+              4.99                                  5.25

THE MONTHLY PRINCIPAL AND INTEREST PAYMENT AT 5.875% IS $1183, AT 5.25% IT IS $1104, A MONTHLY SAVINGS OF $79 FOR GOOD CREDIT. 

FOR A PURCHASE WITH AN 80% LOAN TO VALUE, SAME $200,000 LOAN, SAME 30 YR FIXED RATE LOAN:

660              5.99                                  NOT AVAILABLE

680              5.49                                  5.875

720              5.125                                 5.375

760              4.875                                 5.25

800+            4.875                                 5.125

THE DIFFERENCE IN THE MORTGAGE PAYMENT BETWEEN A 660 CREDIT SCORE AND AN 800 SCORE IS $139 A MONTH, PROVIDING A LOT MORE CASH FLOW FOR THE OWNER WHO PAYS HIS BILLS ON TIME...