Several Factors that Affect Your Mortgage Rate

Factors that Affect Your Mortgage Rate


The amount of your loan can increase your interest rate if the amount financed exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. The conforming loan limit changes at the beginning of each year.Mortgage Rate Factors

Shorter loans, such as 20 year or 15 year note, can save you thousand of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the interest rate changes.

A larger down payment “ greater than 20% “- will give you the best possible rate. Down payments of 5% or less should expect to pay a higher rate as you are starting with less equity as collateral. If you’ve got the cash now and want to lower your payments, you can pay on your loan to lower your mortgage rate. It’s a simple concept, really: In exchange for more money upfront, lenders are willing to lower the interest rate they charge, cutting the borrower’s payments. Closing costs are fees paid by the lender, if you don’t want to pay all of the closing costs, expect a higher rate which will pay the lender additional interest over the life of the loan.

Credit quality and debt-to-income-ratio affect the terms of your loan through FICO Score. If you have good credit and your monthly income far surpasses your monthly debt obligations, you will get approved at a lower interest rate.

Michelle at Caliber Home Loans



  1. Thanks for the tips about what will influence your mortgage rates. I’m hoping to buy a home soon, and I’ll have to keep in mind that I should try to aim for over a 20% down payment to get some better rates. I’ll also try to keep in mind that a shorter loan period will help to cut down on interest. Thanks for your article.

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