Mortgages/Credit Scores/PMI

I would like to address the current state of mortgages today. I spent several hours last week talking with a few loan officers and getting their opinions about what is going on in the market.
These loan officers told me that interest rates have gone up recently and that credit requirements are still fairly tight. Interest rates are still very good but have increased at least half-a-point in the last week. This may continue for a little while. If you are shopping for that home now please consider locking in your rate today.
What about credit scores? Well if you don't have at least a 620 mid credit score you can forget about a mortgage at this time. If you have a credit score between 620 and 680 you had better have 5% to 10% down payment available. You can go FHA which has some good programs available requiring less of a down payment. Please do not discount the FHA route. They have some great interest rates available.
If your credit score is between 680 and 720 you probably can get a conventional loan. Can you get by with no down payment in this credit score range? Possibly, but it depends on your overall financial condition, debt to income ratio etc.
If you have a credit score of 720 and above you are in great shape. Your options increase when your score is above that magic number. You have a chance of avoiding PMI when your score is in this area.
What about PMI? You are required to pay PMI unless your loan amount is less than 80% loan to value. PMI rates today range anywhere between .28% and .78%. What does that mean in real dollars? A bunch of money. With a PMI rate of .5% on a $150,000 loan your monthly PMI charge would be $62.50. $750 a year for PMI. That will by a lot of kid's clothes. If you figure you are going to live in that house for ten years your total PMI charge would be $7,500. That is a lot of money!!
Even if you are not thinking of buying for six months to a year it would be a good idea to go to work on increasing your credit score today. Do you think that is something you can do yourself? You may want to stop and think about that first. If you want to start but aren't sure how please consider giving me a call. I have a solution that can and will help.
I hope you are having a great Monday. Beautiful weather today.
Ron