Factors That Impact Mortgage Rates

Gustan Cho Associates

Factors That Impact Mortgage Rates

What Are Factors That Impact Mortgage Rates:

Many first time home buyers, veteran seasoned home buyers, and homeowners shop for the best mortgage rates available from different mortgage lenders.  The best mortgage rates from mortgage lenders are only offered to mortgage loan applicants with the best credit scores.  Conventional loans are extremely credit sensitive where to get the best available conventional mortgage rates, the mortgage loan applicant needs to have a credit score of higher than 740 FICO.  The minimum credit score required to qualify for a conventional loan is a credit score of 620 FICO.  A 620 FICO is considered a bad credit score for conventional mortgage lenders and is often classified a higher risk mortgage loan borrower.  A mortgage loan applicant with a 620 FICO credit score will more than likely get a high interest rate.  Those with a 620 FICO credit score can shop all they want but the chances are that they will get quoted a higher mortgage rate by mortgage lenders and many mortgage lenders will not even offer a conventional loan with a 620 FICO credit score.  Many conventional mortgage lenders will have their own mortgage lender overlays and set a minimum conventional loan credit score requirements.  Mortgage lenders often charge higher mortgage rates for conventional mortgage loan borrowers with under 700 FICO credit scores.

Factors That Impact Mortgage Rates With FHA Loans

FHA loans are different.  FHA loan applicants with credit scores under 600 FICO will definitely get quoted a higher interest rate.  Those with credit scores between 600 FICO and 620 FICO will be charge a slightly lower rate than those with credit scores of under 600 FICO.  620 FICO credit scores and 640 FICO will get slightly better rates.  To get the best available FHA mortgage rates, a FHA mortgage loan applicant should have a credit score of higher than 680 FICO.

Will Prior Bankruptcies Be Factors That Impact Mortgage Rates?

A prior bankruptcy will have no impact on your mortgage rates.  Whether you are applying for a FHA loan, VA loan, USDA loan, or conventional loan, a prior bankruptcy does not affect the mortgage loan borrower’s mortgage rates.  A prior bankruptcy will affect a mortgage loan applicant’s credit scores which a lower credit score will affect mortgage rates.  The lower your credit score, the higher risk you are under the eyes of the mortgage lender and the higher mortgage rates will be quoted to you.

Will Prior Foreclosure, Deed In Lieu, Or Short Sale Be Factors That Impact Mortgage Rates?

As in the previous example, a prior foreclosure, a prior deed in lieu of foreclosure, or a prior short sale will have no impact whatsoever on your mortgage rates, no matter what mortgage loan program you choose: FHA loans, VA loans, USDA loans, or Conforming loans.  However, a prior foreclosure, deed in lieu of foreclosure, or short sale will affect your credit scores which in turn will affect your mortgage rates.  Lower credit scores are deemed higher risk borrowers which means higher mortgage rates.

Are Property Types Factors That Impact Mortgage Rates?

The type of property a home buyer purchases does affect mortgage rates.  A condominium home buyer will get a higher mortgage rate than a home buyer of a single family home because mortgage lenders classify a condominium higher risk than a single family home.  The higher the risk, the higher the mortgage rates.  A multi unit property will get quoted a higher mortgage rate than a single family home.  A  second home will get quoted a higher mortgage rate than a single family home because it is classfied as higher risk than a single family home.  Yet, an investment home interest rates will be higher than a second home because mortgage lenders believe if things go financially wrong with the homeowner, they are less likely to default on their primary and second homes than their investment property.

Are Credit Scores Factors That Impact Mortgage Rates?

Credit scores are the biggest factor in determining your mortgage rates.  The higher your credit score, the lower your mortgage rates.  Mortgage lenders view higher credit score mortgage loan borrowers as less likely to default on their mortgage loan due to their timely payment history and pattern of managing their money.  If you need a quote for the best mortgage rate and need a pre-approval, apply now by completing our 4 page mortgage application by clicking APPLY NOW and I will get back to you once you complete the application.  I am available 7 days a week, holidays included.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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