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Key Factors Influencing Mortgage Rates

Everyone wants to get the best mortgage rate possible when searching for a new home loan, and at Primary Residential Mortgage in Fort Myers, we’re here to help you in this pursuit. Our mortgage brokers will walk you through all your options, and go over the personal factors in your financial profile that might make certain loans right for you.

What are some of these factors, and how will they impact the kinds of mortgage rates you can expect? Let’s take a look.

Loan Type

In a general sense, there are two types of conventional mortgages available: Fixed-rate loans and adjustable-rate loans. Fixed-rate loans generally begin with higher interest rates, but this is in large part because these rates will remain constant throughout the loan. Adjustable-rate loans, on the other hand, start at lower rates but can rise during the loan. For many people, this comes down to risk-reward calculation.

Loan Length

Mortgages can range anywhere from 10 years to 30 years in most cases, and this length will play a role in the rate you receive. Shorter terms tend to come with lower rates since the lender is taking on less risk in these cases.

Down Payment

In most cases, lenders will require 20 percent as a standard down payment – if you’re unable to pay this, you’ll often have to take on private mortgage insurance to cover more of their risk, which will raise your total mortgage payment. If you’re able to go over 20 percent, though, this could lead to a much better rate.

Loan Size

The larger the principal amount on the loan, the larger the mortgage rate that’s likely to be attached. Again, this is all about risk – a larger amount loaned equals more of it, which means you have to compensate the lender appropriately via interest rate.

Credit Score

The largest single factor you can control is credit score. This is an assessment of your creditworthiness, and you can keep it high by making on-time payments and generally managing your debt well.

The Market

Finally, the market itself will play a big role – often the biggest role, in fact. Many market factors are outside our individual control, and they simply require a careful eye to the market to capitalize when there’s a good period of rates.

Want to learn more about interest rate factors, or interested in a consultation for any of our mortgage goals services? The brokers at Primary Residential Mortgage are standing by.

*The views and opinions expressed are my own and do not necessarily represent the official policy or position of Primary Residential Mortgage, Inc.

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