four major points to consider

Brent highlights four major points to consider as a homebuyer today that will affect your mortgage interest rate.

More of a reader? Catch the video transcript below!

Yo! Brent here. Today, I’m talking about four things that affect your interest rate and some things you might want to consider to get your interest rate lower.

The 4 Things That Determine Your Interest Rate

1. The Term of Your Loan

Typically, the shorter the loan term, the faster you’ll pay the bank back — and the lower the rate they’ll give you.

This is because it’s less risky for them to loan you the money. They’ll get their money back faster with interest, and then they can turn around and churn that money back into the market — so they’ll reward you for that with a lower rate.

The typical tiers for mortgage term length are 30-year, 15-year, 10-year, and sometimes 7-year. These may differ a bit from lender to lender, so make sure you check with yours.

2. Your FICO Score

The next factor is your FICO score — this is going to come into play anytime you apply for any loan. Your FICO score tells the banks what kind of borrower you are. They want to see that you’re a low-risk borrower and that you pay back your debts in a timely manner. If you can show them that with your FICO score, they’ll give you a better rate.

If your FICO score isn’t looking so hot right now, don’t worry. You can actually work with a credit company that can help you repair your credit. In fact, we’ve had several clients that have seen their scores go from the mid-600s to the low and even high 700s in a few short months.

3. Your Loan Product

Another thing you’re going to want to look at is the loan product. The loan product you choose — whether it’s conventional, VA, FHA, jumbo, physician loan, or other — will have an impact on your interest rate.

Now, you’ll want to take multiple factors into account when you’re evaluating your options for mortgage products. Some may come with slightly lower interest rates, but higher fees, mortgage insurance, and things of that nature, so just make sure you’re looking at the big picture here.

4. Your Down Payment

The fourth thing the lenders will be looking at when they determine your interest rate is how much money you’re putting down. If you have a higher down payment, it’s less risky to the lender because they’re not having to cover as much of the loan.

These are just a few of the things you can think about to try to lower your mortgage rate. With rates on the rise these days, I know this is something on a lot of buyers’ minds — but I hope this gives you some encouragement that there are some things you can do to get a better rate.

That’s going to be it for me today…see you in my next blog!