Know what affects mortgage rates
There are rules that apply to everything in life and that includes mortgage rates. It’s not enough to simply want to secure the best mortgage rates; you have to know what factors affect the mortgage rates you receive and what you can do to improve your chances of finding a rate that is affordable for you.
What Affects Your Mortgage Rate?
Your finances – If your finances are not solid then securing a mortgage will be difficult and costly. After all, a mortgage is a loan, a loan that will be paid for many years to come. Would you risk lending thousands of dollars to someone who can’t prove their financial security? Both your income and your credit rating are taken into consideration when you get a mortgage loan and both will need to be moderate to high. Remember, the higher your financial rating is the lower the interest rate you are offered will be.
The amount of your down payment – The more money you put down, the less money you’ll need to borrow, and the less risky loaning money to you will be perceived by the lender.
The length of your loan – The shorter the length of your mortgage loan is, the lower the mortgage rate will be and vice versa if it’s longer.
The type of loan you take out – Fixed mortgage rate loans are set for the entire life of the loan, whereas variable rate mortgages can change over time, causing your rates to fluctuate as well.
The value of the home – The value of the home you are in or the one you are wanting to purchase will greatly affect the mortgage rate you receive, whether you are looking to purchase or refinance.
Current market conditions – The economy and housing market in particular will have a direct effect on the mortgage rates you receive. If the economy is doing well you should be able to secure good interest rates, but rates often tend to be even better when the economy is on a decline.
These are just a handful of the factors that affect the mortgage rates you will be quoted if you are seeking a mortgage home loan. Being aware of them even before you begin searching for a home can help you get mortgage rates that are fair and affordable.