| things affect mortgage rates - which is why they | | | | is the equivalent of paying $1,000 to ensure you get a |
| fluctuate. So it pays to understand a little about how | | | | lower interest rate that saves you money over the life |
| mortgage interest rates are generated. The more you | | | | of your loan. |
| know about the economic factors that change rates, | | | | Credit and Payment History |
| the more prepared you are to find the perfect home | | | | A less-than-perfect track record may make you seem |
| loan at an interest rate that's perfect for you as well. | | | | like a high credit risk, which means you'd only be eligible |
| Market Conditions | | | | for higher mortgage interest rate loans. If you find |
| When the Federal Reserve Board raises or lowers | | | | yourself in this position, don't worry - we have loans |
| rates, there is usually an impact on the rate you will get | | | | that could still help you make your dream a reality. |
| for your fixed rate home loan, although it's not as direct | | | | Credit and Payment History |
| as it may seem. The Federal Reserve adjusts federal | | | | A less-than-perfect track record may make you seem |
| funds rate, which is the rate at which banks lend to | | | | like a high credit risk, which means you'd only be eligible |
| each other. When federal funds rate decrease, we | | | | for higher mortgage interest rate loans. If you find |
| spend more, which can actually increase inflation. | | | | yourself in this position, don't worry - we have loans |
| Mortgage rates tend to be longer-term rates that are | | | | that could still help you make your dream a reality. |
| affected by concerns about inflation, as well as other | | | | Learn more about Bad Credit Loans. |
| economic indicators like job growth. So it's more | | | | Debt-To-Income Ratio |
| accurate to say that mortgage rates are indirectly | | | | Your monthly debt obligations are calculated against |
| affected by the Federal Reserve Board, and more | | | | your current income. The higher the ratio, the higher the |
| directly affected by what happens every day in active | | | | risk which could mean a higher interest rate. |
| public markets. The market sets the interest rate, and | | | | Loan-to-Value |
| then a margin is added to the index to determine your | | | | The loan-to-value is the amount you need to borrow |
| final mortgage interest rate. | | | | versus the value of the home you want to buy. The |
| Timing | | | | more equity you have or the more money you give as |
| Since interest rates change daily, the longer a lender | | | | a down payment decreases a lender's risk, often |
| locks in a rate, the higher the risk that the market will | | | | resulting in a lower rate for you. |
| move against them. Therefore, you pay more (in | | | | Property Type |
| points) for a longer guarantee. If interest rates appear | | | | Lender risk plays a big part in your rate. For instance, a |
| to be on an upswing, it makes sense to lock in your | | | | loan for a single-family home is less risky than one for |
| rate. If they are steadily dropping, it makes sense to | | | | a multi-family home because there are fewer |
| float your interest rate so that you can take | | | | variables. The less risk, the better the rate. |
| advantage of a shorter lock-in period, saving you | | | | Occupancy |
| money. | | | | If you plan on living in your new home, you will probably |
| Points | | | | get a better rate versus a loan on a rental unit, which |
| You can often receive a lower mortgage interest rate | | | | carries more risk for the lender. |
| by paying extra points - mortgage costs that are | | | | Loan Amount |
| up-front rather than built into the interest rate. Each | | | | The amount of money you borrow could affect the |
| point equals one percentage point of the total amount | | | | interest rate you get. |
| of the loan. For example, one point on a $100,000 loan | | | | |