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Before starting your Newport Beach home search, you'll want to know how much it'll cost in the long term. Our online payment calculator can give you a good idea of what to expect in monthly payments, so you'll know what Newport Beach homes to look for in your real estate search. But as with any other investment, it won't hurt to get informed and know what you're paying for.

So what goes into your mortgage payments? In Newport Beach CA, it mostly depends on three factors: your credit score, your down payment, and the discount points you pay.

Your Credit Score

Your credit score affects the interest rate you pay on your mortgage. Credit scores give the lender an idea of how well you can handle credit: how much debt you have, how much your making, how timely your payments are. A higher credit score suggests you're fit to invest in Newport Beach real estate and are of "low risk" to the lender. In return, they give you a low interest rate, which helps expand your options in your Newport Beach home search.

To maximize your chances, get a copy of your credit report from the three credit bureaus (Experian, TransUnion, and Equifax) before your real estate search. Your lender can access this data as well, so getting them in advance gives you time to correct any errors.

Your Down Payment

The general rule is that a cash-down of less than 20% will get you a higher interest rate, require mortgage insurance, or force you to get a piggyback loan. This is why agents often recommend limiting your home search to Newport Beach homes where you can afford a 20% down payment.

Having less than 20% won't keep you from getting a mortgage or expanding your Newport Beach real estate search. Many Newport Beach CA homeowners get their loans through FHA or VA programs, which are backed by the government and require little to no down payment. You can also look into down payment assistance programs, or opt for a zero-down loan with a higher interest rate. Take these options into account when doing your Newport Beach home search so you'll know what to expect when taking out your loan.

Your Discount Points

A discount point is equivalent to 1% of the loan amount, and is paid optionally during closing. It works as a prepaid interest plan, with each point lowering your interest rate by 0.12% to 0.25%. For example, on a $100,000 loan, a discount point costs $1,000. Buying two discount points for $2,000, assuming an interest rate of 5%, will lower the rate to 4.5%. This plan works well for homeowners who plan to stay in their Newport Beach homes long enough to benefit from the savings.