TIP stands for Total Interest Percentage (TIP) and it helps you understand how much interest you have to pay in the whole loan term. This is very important information because with this information you can easily find out the total interest cost of your mortgage. You can find the TIP for your loan on the 3rd page of your Loan Estimate. This information is also available on the 5th page of your mortgage’s closing disclosure. For a 30-year fixed mortgage, 5.11% is a good total interest percentage.
Key Takeaways
- The total interest percentage shows you how much money you have to pay as interest over the loan term
- If you get a lower TIP then it means your mortgage will be more affordable, and your interest cost will be lower
- What will be your TIP mostly depends on the credit score, loan type, and down payment
- If you have a poor credit score then your Total Interest Percentage (TIP) will be very high
Definition of TIP
The total interest percentage is a very important term and it is calculated by adding up all the interest payments and then dividing the total by the loan amount to get a percentage. It will show you how much money you have to pay as interest over the loan term. In order to find the average TIP, you have to add all the scheduled interest payments. Then you have to divide the total by the loan amount and you will find the average TIP for your loan. For example, if the mortgage is $100,000 and if the TIP is 50% then you have to pay $50,000 in interest over the life of the loan. So, in total, you have to pay $150,000 to the lender.
What is a Good Total Interest Percentage for a Home Mortgage?
Mortgage rates fluctuate every day, therefore, it is very difficult to identify a good total interest percentage for a home mortgage. Having a lower TIP means your mortgage will be more affordable, and your interest cost will be lower. You should also keep in mind that the mortgage interest rate varies by lenders and the borrower’s credit score, loan type, and down payment. Therefore, when you are trying to purchase a mortgage, you should check the interest rate of various lenders. The below table will give you a clear idea about a good TIP for a home mortgage –
| Mortgage Type | Average TIP |
| 30-year fixed | 5.04% |
| 20-year fixed | 4.61% |
| 15-year fixed | 4.18% |
| 7/1 ARM | 4.93% |
| 5/1 ARM | 4.52% |
| 30-year FHA | 4.25% |
| 30-year VA | 4.33% |
List of Good TIP based on Credit Score
Your credit score can range from 300 to 800 and depending on your credit score the average TIP could increase or decrease. If you have a better credit score then your total interest percentage will be lower. On the other hand, if you have a poor credit score, then your TIP will be high. Higher TIP will increase your mortgage cost while lower TIP will offer you an affordable mortgage. Below table shows a good TIP for a 30-year fixed-rate mortgage of $300,000:
| FICO Score | Average TIP |
| 620 to 639 | 6.100% |
| 640 to 659 | 5.554% |
| 660 to 679 | 5.124% |
| 680 to 699 | 4.910% |
| 700 to 759 | 4.733% |
| 760 to 850 | 4.511% |
List of TIP by State
| State | 15-Year Fixed | 30-Year Fixed | 5/1 ARM |
| Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of ColumbiaFlorida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming | 4.34% 3.98% 4.37% 4.44% 4.38% 4.22% 4.26% 4.38% 4.05% 4.26% 4.46% 4.00% 4.50% 4.51% 4.64% 4.26% 4.44% 4.59% 4.41% 4.50% 4.12% 4.26% 4.64% 4.33% 4.34% 4.43% 4.30% 4.53% 4.55% 4.43% 4.26% 4.29% 4.43% 4.43% 4.35% 4.58% 4.40% 4.30% 4.43% 4.51% 4.49% 4.33% 4.30% 4.25% 4.38% 4.40% 4.09% 4.39% 4.61% 4.48% 4.38% | 5.09% 4.70% 5.15% 5.08% 5.18% 5.03% 5.05% 5.13% 4.85% 4.99% 5.13% 4.85% 5.26% 5.19% 5.25% 4.99% 5.09% 5.25% 5.08% 5.24% 4.88% 4.97% 5.25% 5.05% 4.93% 5.11% 5.03% 5.10% 5.31% 5.15% 5.02% 4.96% 5.17% 5.05% 4.96% 5.21% 5.13% 5.16% 5.14% 5.17% 5.14% 4.98% 5.00% 5.06% 5.18% 5.14% 4.86% 5.18% 5.13% 5.16% 5.16% | 3.48% 6.63% 4.36% 4.51% 4.03% 4.35% 3.79% 4.19% 3.88% 4.13% 4.31% 3.77% 4.54% 4.36% 4.53% 4.02% 4.38% 4.53% 3.97% 4.29% 3.90% 3.66% 4.56% 4.35% 4.13% 4.62% 4.07% 4.61% 4.46% 3.64% 4.10% 4.53% 4.10% 3.75% 3.90% 4.59% 4.77% 4.58% 4.02% 3.84% 4.09% 4.43% 4.49% 4.14% 4.36% 3.72% 3.95% 4.41% 4.15% 3.91% 4.68% |
FAQs about What is a Good TIP on a Home Mortgage
What is a good total interest percentage on a 30-year mortgage?
The answer to this question depends on quite a few things. However, the national average total interest percentage (TIP) on a 30-year mortgage in 2022 is 3.37%.
Is 3% a good interest rate on a house?
According to most financial experts, an interest rate of 3% or below is considered as a good interest rate on a house. You should keep in mind that the lower your interest rate is, the more money you will be able to save on mortgage interest.
Is a 4.2 interest rate good?
According to data, the average interest rate from 2018 through 2021 in the USA was 4.42% to 5.5%. So, if your interest rate is between these ranges or below then you have a good interest rate. So, it is fair to say that 4.2 is a good interest rate.
Can I negotiate a mortgage rate?
Yes, you can negotiate a mortgage rate with the lender. In fact, you can compare between lenders and then find the best deal for you. If you have an excellent credit score then you can easily negotiate a better interest rate with the lender.
References:
https://www.eater.com/2018/11/28/18112819/tipping-in-america-guide-restaurants-how-much
https://www.realsimple.com/work-life/money/money-etiquette/tips-for-tipping-at-restaurants