There are many factors that can affect your mortgage rate and we want to make sure you know what they are no matter what place you’re at in the home buying process. As often as low interest rates are advertised, many who apply find out they don’t qualify. The best way to avoid this situation is to learn about the factors that affect your interest rates so you’re able to get the best home loan available to you.
How Does It Work?
A mortgage rate is the percentage of your loan balance which you pay for the money provided by your lender to buy your home.
Your mortgage rate depends on several factors which include the housing market and how it changes in regard to the global economy. This is the main reason why mortgage rates are constantly changing. Since you cannot predict just how the market will shift due to the financial impact of the economy, it’s important to focus on the things you can change, like your financial portfolio, if you are planning to buy a home.
Your Credit Score
The first thing you should consider is your credit score. All lenders have different requirements, but your credit score is one they will take into consideration. The better credit rating you have, the better interest rate you will qualify for in most cases. It’s important to learn about how credit scores work and how you can increase your credit score before applying for a home loan.
Another key factor that can affect your mortgage rate is the amount of your down payment. The amount of your down payment will vary depending on the lender you choose to work with, but generally, the best mortgage rates will be given to those you can come up with with 20 to 30 percent of the value of the home. The more you are able to put down, the mess you will have to pay monthly and it will improve your chances of getting approved with a lower interest rate.
Another thing that can affect your mortgage rate is the amount of loan requested. If you are seeking a larger than standard amount, you would need to secure a jumbo loan which varies from market to market. If you are seeking a conventional loan with a shorter term, this can also save you on your interest costs.
If you are thinking about using your home as a rental or investment, this can also affect your mortgage rate. Also keep in mind the location and type of property are factors that lenders take into consideration when determining your interest rate. But keep in mind, even if you do have a specific reason for buying your home, you still won’t know your specific mortgage rate until you get a quote based on your individual financial portfolio.
Give Us a Call Today
Since mortgage rates are always changing, the best thing you can do is make sure you are financially secure before reaching out to a lender. If you have questions about the current market or what you need to get started, give us a call at North Star Mortgage and we can help you get started on the road to buying your dream home.