Factors Affecting Mortgage Interest Rates On Home Loans

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Factors Affecting Mortgage Interest Rates

This BLOG On Factors Affecting Mortgage Interest Rates Was Updated And PUBLISHED On August 22nd, 2019

Factors Affecting Mortgage Interest Rates
GCA

There are certain factors affecting mortgage interest rates. Both government and conventional loans have pricing adjustments depending on the qualifying factors that determine a rate.

The biggest factors affecting mortgage rates with conventional loans are:

  • Credit Scores
  • Loan to value
  • Loan Amount
  • Property type

In this article, we will cover and discuss the Factors Affecting Mortgage Interest Rates On Home Loans.

Factors Affecting Mortgage Interest Rates On Government Loans

what are Factors Affecting Mortgage Interest Rates On Government Loans

Factors affecting mortgage rates on government loans such as FHA, VA, USDA are the following:

  • Credit scores
  • Property types
  • Loan type
  • Loan To Value are not big factors affecting mortgage rates on government loans like conforming loans
  • Rates do affect government loans if borrowers have under 680 credit scores

This is since they are insured by the federal government.

Shorter Term Loans Have Lower Mortgage Interest Rates

what are Shorter Term Loans Have Lower Mortgage Interest Rates

Shorter term loans versus 30 year fixed rate mortgages are factors affecting mortgage interest rates on all types of home loans:

  • The shorter the term of the mortgage loan, the lower the interest rate. 
  • 15 year fixed rate mortgage offers a lower mortgage interest rate than a 20 year
  • A 20 year fixed rate mortgage offers a lower interest rate than the 30-year fixed-rate mortgage
  • Adjustable rate mortgages generally have lower interest rates than a fixed rate mortgages due to the limited liability the lender has

Payments could get higher after the interest rate changes on the adjustable rate mortgages when the fixed rate period is over and the rates start adjusting.

Larger Down Payments Are Factors Affecting Mortgage Rates On Conventional Loans

Are Larger Advances a Factor for Mortgage Rates on Conventional Loans

A larger down payment “ greater than 20% “- will give borrowers the best possible rate on conventional mortgage loans.

  • Down payments  on home purchases on conventional loans of 20% or less should expect to pay a higher rate as you are starting with less equity as collateral
  • 25% down payment and 740 credit scores will get conventional borrowers the best rates

Borrowers have the option of buying discount points to lower mortgage interest rates.

Credit Scores And Loan To Value Are Factors Affecting Mortgage Rates

Whether credit performance and loan value are factors that affect mortgage rates

Credit quality and debt-to-income-ratio affect the pricing of Conventional Loans. Conventional Borrowers with good credit will get lower conventional mortgage rates than borrowers with lower credit scores.  Loan To Value and Credit Scores are the two largest factors affecting rates.

For more information about the contents of this article, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays. We are direct lenders with no lender overlays on government and conforming loans. Gustan Cho Associates are also experts in Non-QM and Alternative Financing. We also cater to self-employed borrowers with our bank statement mortgage loans for self-employed borrowers.

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