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Your mortgage rate is Determined by Four Factors

Friday, October 14, 2022   /   by Laura Larson

Your mortgage rate is Determined by Four Factors

If you're seeking to purchase a home, you undoubtedly want to make sure that your mortgage has the lowest interest rate feasible. That was simpler to achieve in the previous two years since the housing market saw record-low mortgage rates, but this year, rates have sharply increased.


Here are a few things to pay attention to if you want to find a technique to counteract the increased rates of today and secure the lowest rate possible. Connect with a reputable lender for individualized guidance since approval chances can vary.


Your Credit Score


Your credit score is a key factor in determining your mortgage rate. Mortgage lenders are more likely to approve you for a mortgage when you establish and maintain good credit history, including using credit and making payments on time. Additionally, having good credit increases the likelihood that your lender will approve you for a mortgage with more advantageous conditions and a lower interest rate.

Because of this, it's critical to keep a high credit score. Seek a dependable advisor who can offer you professional guidance if you want to concentrate on raising your score.


Your Loan Type


There are numerous loan types available, each with unique terms for qualifying purchasers.

Mortgage loans fall into these major types, Conventional, FHA, USDA, and VA loans. Rates and qualifications will vary depending on the loan type that is selected to best meet your needs.

Find out what's available in your region and what kinds of loans you might be eligible for while working with your real estate advisor.


Your Loan Term


It's crucial to take the loan term into account when selecting the best home loan for you because it determines how long it will take you to pay off your debt until you own your house outright. Your interest rate, monthly payment, and total interest paid over the loan's length will all be impacted by the loan's term. The term of your loan may alter your mortgage rate as well, depending on your circumstances.


Your Down Payment


If you currently own a home and are planning to sell it and relocate, you can utilize the equity you've accrued to put a down payment on a new house. The CFPB clarifies:


Since lenders perceive a lesser degree of risk when you have larger ownership of the property, a larger down payment typically translates into a cheaper interest rate. You'll typically get a lower interest rate if you can safely put down 20% or more.


Make contact with a lender to discover more about the impact a larger down payment can have on your new mortgage.


Bottom Line


If you're buying a home, here are just a handful of the variables that can affect your mortgage rate. The best course of action is to have a group of experts on your side. Contact Laura Larson today and she will connect you with a dependable lender to get you the best terms and rates possible.