Determine Your Interest Rate

Do you know how your interest rate is determined? Here are some key factors that influence your mortgage interest rate:

There are a variety of loan programs such as, conventional, FHA, USDA, and VA and each may have varying interest rate structures. Each program has its own set of guidelines, which can affect the interest rate offered.

Home Location

Rural vs urban, property values and property taxes, local economy, and risk factors (such as flooding) may all play a part in your interest rate.

Credit scores

Generally, if you have a higher credit score, your interest rate is likely to be lower. And if you have a lower credit score, your interest rate might be higher. Lenders view credit scores as a way to predict if you will be reliable in paying back your loan.

Loan Amount

Once you know the home price, down payment, and estimated closing costs, you can calculate the amount you’ll need to borrow by subtracting your down payment and any upfront costs from the home’s purchase price. Your interest rate could be higher based on the amount borrowed.

Down Payment

Typically, when you put more skin in the game (a larger downpayment) you will get a lower interest rate. The lower the overall cost to borrow (ie, lower interest rate) means you keep more money in your pocket in the long run.

Loan Term

A 30 year loan for example will have a higher monthly payment and a higher interest rate than a 15 year loan.

Keep in mind that whatever your situation looks like, I ALWAYS recommend talking to multiple lenders before making a final decision on where to get your loan.

I love to connect my clients to the best industry professionals, so let me know if you would like a list of my preferred lenders.

I also LOVE to answer questions and offer guidance, so please contact me if I can help!