For a $200,000 30-year fixed-rate mortgage, the interest rate you receive can significantly vary based on your FICO score. Generally, higher FICO scores (typically 740 and above) often qualify for lower interest rates, which translates to lower monthly payments and overall interest costs throughout the life of the loan.
Here's how different FICO score ranges might impact your mortgage interest rate:
- FICO Score 760-850: You might qualify for the best interest rates, potentially around 3.0% or lower.
- FICO Score 700-759: You may receive slightly higher rates, maybe around 3.25% to 3.5%.
- FICO Score 660-699: You could see rates in the range of 3.75% to 4.0%.
- FICO Score 620-659: The interest rate might increase further, possibly around 4.25% to 4.5%.
- FICO Score below 620: Your rates could be significantly higher, perhaps starting at 4.75% or more.
To provide a rough estimation of monthly payments:
- At a 3.0% interest rate for a $200,000 mortgage, your monthly payment could be approximately $843.
- At a 4.0% interest rate, the payment increases to about $955.
- At a 5.0% interest rate, the payment might rise to about $1,073.
Over the life of the loan, these differences in interest rates can lead to substantial savings or increased costs. For instance, at a 3.0% interest rate, you would pay around $303,000 in total by the end of the loan term, whereas at a 5.0% rate, you could end up paying approximately $402,000 in total—almost $100,000 more.
Maintaining a higher FICO score is crucial for securing more favorable loan terms, ultimately reducing your overall financial burden.