Four Things That Help Determine Your Mortgage Rate
If you’re looking to buy a home, you probably want to secure the lowest interest rate possible for your home loan. Over the last couple of years, that was easier to do as the housing market saw record-low mortgage rates, but this year rates have risen dramatically.
If you’re looking for ways to combat today’s higher rates and lock in the lowest one you can, here are a few factors to focus on. Since approval opportunities can vary, connect with a trusted lender for customized advice.
Your Credit Score
Credit scores can play a big role in your mortgage rate. Freddie Mac explains.
That’s why it’s important to maintain a good credit score. If you want to focus on improving your score, your trusted advisor can give you expert advice to help.
What is a good credit score to buy a house in Kalamazoo, Michigan?
If you’re planning to apply for conventional financing, it is wise to apply for a loan if your credit rating is above 620 points. If you fail to meet that mark, you may or may not be approved for your loan, with the lender having the option of offering you a higher interest rate in the event that you qualify. This can increase your monthly payments.
Your Loan Type
There are many types of loans, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says →
When working with your real estate advisor, make sure you find out what’s available in your area and which types of loans you may qualify for.
What is the most common type of home loan in Kalamazoo?
Conventional loans are by far the most typical type of mortgage. Nonetheless, conventional loans have a lot more stringent criteria regarding your credit rating and your debt-to-income (DTI) ratio. You can buy a home with as little as three percent down on a conventional loan.
Your Loan Term
Another factor to consider is the term of your loan. Just like with location and loan types, you have options. Freddie Mac says.
Depending on your situation, the length of your loan can also change your mortgage rate.
What is the typical loan term for a house in Kalamazoo?
Mortgages can often be 30 years or as short as 10 years. Short-term mortgages are mortgages that are, on average, 10 and 15 years. Long-term mortgages are usually 30 years in length.
Your Down Payment
If you’re a current homeowner looking to sell and make a move, you can use the home equity you’ve built over time toward the down payment on your next home. The CFPB explains:
“In general, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can comfortably put 20 percent or more down, do it—you’ll usually get a lower interest rate.”
To learn more, connect with a lender to find out the difference a higher down payment can make for your new mortgage.
Where to Go From Here
These are just few factors that can help determine your mortgage rate if you’re buying a home. The best thing you can do is have a team of professionals on your side. Connect with a local real estate professional and a trusted lender so you have the expert advice you need in each step of the process.