Real Estate - Get In The Know
Financing
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What Determines Mortgage Rates
What determines mortgage rates can change daily, which is why rates change so frequently. One major aspect of the calculation is your financial situation and history. Even after you see the advertised rates, there is room for negotiation from the lender based on several factors.
Your credit history is a large determinant of the mortgage rate you are offered.
A less-than-perfect track record may make you seem like a high credit risk, which means you'd only be eligible for higher mortgage interest rate loans. Even if you have 'less than perfect credit' you can still qualify for a loan. There are many poor credit lenders to work with.
Debt-To-Income Ratio
Your monthly debt obligations are calculated against your current income. If you have a high ratio, you are considered a higher risk to make your payments. You might be robbing Peter to pay Paul.
The less risk, the better the rate. There is less lender risk for a single-family home than a multi-family. If you plan on living in the home you are financing there is less risk. If the house is not owner-occupied, it may be easier to walk away from in times of trouble.
The loan-to-value is the amount you need to borrow versus the value of the home you want to buy. The more equity you have or the more money you give as a down payment decreases a lender's risk, often resulting in a lower rate for you. The actual amount of money that you borrow could affect your interest rate.
There is alot that goes into how home mortgage rates are calculated. Make sure you are educated so you can get the best deal. PR