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With so many loan programs and offers out there, how will you know which one is right for you? When buying a home, getting a low mortgage rate is always a top priority. However, many factors may affect the rate you receive. Here’s how lenders determine the interest rate for your mortgage.
The real estate market is an ever-changing beast. One day, the rates are low, and seemingly overnight, they skyrocket out of your reach. The current condition of the market will ultimately determine your interest rate.
When applying for a mortgage, your loan officer may try to help you lock in a low-interest rate. Once you do this, your rate will neither increase nor decrease, no matter what the market does. If the rates are low, this trick will help you get the best deal possible.
Are you a safe borrower, or do lenders see you as a risk? Take a look at your credit score to determine the answer—the higher your score, the lower your interest rate. Lenders prefer to see scores over 720. While you can still get a mortgage with an unfavorable score, expect a higher rate.
If your credit score is lower than you want, you can try to improve it. Make sure you always pay your credit cards, car loans, and other lines of credit on time. Any late payments will negatively affect your rating.
There are different types of mortgages available. Fixed-rate and adjustable-rate are the two most common. In a fixed-rate mortgage, you pay the same rate for the term of the loan. However, an adjustable-rate mortgage fluctuates according to the market. You may start with a lower rate that increases with every passing year. Both types of loans are beneficial to homebuyers, and a mortgage consultant can help you choose the one that’s right for your situation.
Midland Mortgage Corporation knows how to find the best mortgage rates for all homebuyers. We offer a full range of products and services to help you get into the home of your dreams. Get in touch with us to learn which loan programs best suit your financial needs.