While that may seem insignificant, for the average homebuyer, it can cost them an additional $60-75,000 over the life of the loan. But interest rates alone are not the only expenses in home buying.
While some of the costs are upfront and generally well-known, such as the earnest money deposit (EMD) or down payment, most additional costs are unknown to the masses.
Financial experts recommend putting down 20% of a home’s purchase price, giving a total loan-to-value (LTV) of 80%. Having an LTV of 80% for a conventional loan means mortgage insurance is not needed.
Mortgage insurance (MI) is one of the hidden costs that fluctuate depending on loan factors, including credit score, loan amount, and debt-to-income (DTI) ratio.