We all want the lowest rate we can get on a mortgage. So what are the biggest factors to getting the lowest rate?
Credit Score
Credit scores can play a big role in your mortgage rate. Freddie Mac says: “When you build and maintain strong credit, mortgage lenders have greater confidence when qualifying you for a mortgage because they see that you’ve paid back your loans as agreed and used your credit wisely. Strong credit also means your lender is more apt to approve you for a mortgage that has more favorable terms and a lower interest rate.”
That’s why it’s important to maintain a good credit score for a mortgage or any kind of loan! If you want to focus on improving your score, let me show you how your credit score works and ways to improve it! I can pull a free copy of your report and give you a review and specific pointers on how to improve!
Loan Type
There are many types of mortgages, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says: “There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”
I have access to every and all mortgage loans in the market today. They all have benefits and disadvantages including different rate options. My job is to show you!
Loan Term
Another factor to consider is the term of your loan or mortgage. Just like with location and loan types, you have options. Freddie Mac says: “When choosing the right mortgage for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”
Lower-term mortgages like a 15 or 20-year loan can also come with a lower interest rate. This will also raise the payment so it is important to review all your loan options!
Property Type and Use
The type of home like a single family to a condo, townhouse, or even manufactured home can play a big role in the rate that you get. On top of that is the type of use. There are ways that lenders classify the use. Primary residence, Second Home, and Rental Property. Each of these have different mortgage rates!
Down Payment or Loan to Value
If you’re a current homeowner looking to sell and make a move, you can use the equity in your home that 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.”
