Home Mortgage Rates
📈Factors That Impact Your Rate
Your credit score (FICO score)
This is perhaps the best known influencer of your mortgage. FICO considers 5 factors: (1) your payment history, (2) how you utilize your credit, (3) the length of your credit history, (4) new credit accounts, and (5) your credit amount mix.
Lenders want to feel comfortable in your ability to pay back what might be the biggest loan of your life. If you make payments on time, avoid opening too many accounts, among other things, you’ll have a respectively higher credit score. Lenders are looking to offer mortgages to consumers who have high credit scores. With that being said, it doesn’t mean that lenders won’t work with you to help build your credit. There are tips that they can offer you on how to buy a home with bad credit.
Your Down Payment
Everything comes down to risk. The less risk your lender has, the more willing he will compromise of your rate. They have done away with a required 20% down payment on a home. However, the general rule is, the less you put down the higher your rate will be.
It is a good idea to shop around and look at different rates, as they will vary from lender to lender. You may only need to put down 5% to positively influence your mortgage rate.
Your Loan Product
There are a variety of different loans you may qualify for that may have a positive impact on your mortgage interest rate.
There are 15 – 30 year conventional loans that typically require a 20% down payment, or FHA (Federal Housing Administration) loans that can require as little as 3.5% down and offer more attractive interest rates. However, because FHA loans don’t require 20% down, it may require the buyer to purchase PMI (private mortgage insurance), which protects the lender if the buyer should default on the payments.
Choosing your loan product is a crucial decision. Our lenders can help you choose which loan product is the best for you.
Your Employment History
In order to secure a loan, your stability of income is considered.
Your Local Market
Rates vary depending on where you live. We can help you find lenders who serve your area.
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