Buying A Home? A Few Things That Will Affect Your Mortgage Interest Rate
Posted on: 28 December 2017
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If you are already shopping for a new home, you may have talked with a mortgage broker and been approved for a loan. However, it is important that you look around for the best interest rate for the loan. Here are some factors that will affect the interest rate that you can control or manipulate so you are not paying more than you should.
Credit Score
While you are looking for a home, take some time to try and improve your credit score. Pay down on your credit cards. If there are any accounts that are in arrears, be sure to make them current. Talk with your creditors about removing any negative comments once you have paid them.
Down Payment
The more money you have for a down payment the better. Not only will this reduce the amount of loan you need, it will also give you the opportunity for lower a lower interest rate. Talk with the mortgage broker to determine if it would be better for your situation to pay your credit cards down further or save the money for a larger down payment. Keep in mind, a lower loan amount and lower interest rate will mean a lower monthly payment.
Length Of Loan
While the payments will be lower on a 30-year mortgage than what they will be on a 15-year mortgage, you may not be able to afford the payments on the shorter term. However, after talking with the mortgage lending company, you may find that the lower interest rate on the shorter term makes things easier. Consider how much you can afford to pay comfortably each month and see what type of interest rate you can get.
Type of Loan
Make sure the broker is looking into all the different types of loans for which you qualify. If you have any military service, ask about a VA loan. You should also find out about FHA, Freddie Mac, Fannie Mae, and USDA loans. If possible, talk with your realtor to see if the seller can help with a second mortgage. This will mean you need to borrow less from the mortgage company and can get a lower rate.
The interest rate on your mortgage determines how much you have to pay each month and also how much you will pay in total for your home. When the market forces higher rates, you need to find ways to make yourself more favorable for a lower than average rate. While it may mean waiting a bit to buy the house, it will make things easier on your finances so you can enjoy the new place instead of stressing about making the payments.