6 Factors That Determine first Time Home Buyer’s Mortgage Rate
The interest rate attached to your home loan will not only affect your monthly mortgage payment, it will also affect the amount of interest you end up paying over the life of the loan. Therefore, it is essential that you do everything you can to get the best rate possible. Below is a list of factors that can determine the mortgage interest rate you receive.
Credit score - This the most important factor. The higher your scores, the less risk to the lender. Most lenders consider good scores between 700 to 749, while an excellent credit score is anything over 750. This does not mean you cannot purchase a home with lower credit scores, because you can.
Down payment - The larger your down payment, the lower your interest rate should be. Again, less risk. However, a large down payment is not required to purchase a home. You can purchase a home with no down payment or as little as 3.5% down.
Property location - Are you buying your home in an urban or rural area? This will also impact your rate.
Loan type - VA, conventional, FHA or USDA, your loan type does affect your interest rate.
Loan term - Duration of your loan. Shorter term loans generally get lower interest rate, hence, 15 years vs. 30 years.
Interest rate type - Fixed or adjustable? Your initial interest rate may be lower with an adjustable-rate loan, however, it may increase later down the road.
Now that you know a bit more about how your mortgage rate will be determined, our hope is that you will use this information to help you prepare for your home buying process. You are the best part of what we do. Thank you for stopping by. Until next time...Diana
