In Miami it is lowered by an average mortgage cost by $27K.
Homebuyers with a lower credit score pay thousands of dollars more for the same home than a buyer with an excellent credit score.
A new Zillow analysis found that nationally, a borrower with an "excellent" credit score could get a mortgage with a 4.50 percent Annual Percentage Rate (APR). A similar borrower with a "fair" credit score could get a 5.10 percent rate. Over the lifetime of a 30-year mortgage, this means a buyer with a fair credit score can end up spending $21,000 more than a buyer with an excellent credit score for the typical U.S. home.
That difference is magnified in expensive markets. In San Jose, the median home value is $1.3 million, and a buyer with a lower credit score can end up paying $129,000 more than a buyer with an excellent credit score over the full life of the loan.
Florida credit score savings
Similar results were found in the three Florida cities included in the study. In higher-priced Miami, the total amount of money paid over the course of a 30-year loan on a $269,500 house would be $393,000 for a buyer with a good credit. But a buyer with fair credit would shell out $420,000 – a $27,000 difference.
In Tampa, a $201,000 home would cost a buyer with fair credit $314,000 over 30 years; but it would cost a buyer with good credit only $296,000 – an $18,000 difference. In Orlando, a $224,500 home would cost a buyer with fair credit $349,000; but it would cost a buyer with good credit only $296,000 – a $20,000 difference.
Even if a homeowner doesn't pay out a full 30-year term on a loan, the annual costs of a fair credit score can add up. A buyer with a fair credit score could pay $700 more every year on the typical U.S. home than someone with an excellent score.
Homebuyers with excellent and fair credit scores in Pittsburgh see the smallest difference in mortgage rates the study found; as a result, it also has the smallest difference in lifetime mortgage costs among the country's 35 biggest markets. A buyer with a fair credit score would pay about $9,000 more on the median Pittsburgh home than someone with excellent credit.
© 2018 Florida Realtors®
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