Leave a Message

Thank you for your message. We will be in touch with you shortly.

Four Things That Help Determine Your Mortgage Rate

Four Things That Help Determine Your Mortgage Rate
If you’re looking to buy a home, you probably want to secure the lowest interest rate possible for your home loan. Over the last couple of years, that was easier to do as the housing market saw record-low mortgage rates, but this year rates have risen dramatically.
 
If you’re looking for ways to combat today’s higher rates and lock in the lowest one you can, here are a few factors to focus on. Since approval opportunities can vary, connect with a trusted lender for customized advice.
 
Your Credit Score
 
Credit scores can play a big role in your mortgage rate. Freddie Mac explains:
 
When you build and maintain strong credit, mortgage lenders have greater confidence when qualifying you for a mortgage because they see that you’ve paid back your loans as agreed and used your credit wisely. Strong credit also means your lender is more apt to approve you for a mortgage that has more favorable terms and a lower interest rate.”
 
That’s why it’s important to maintain a good credit score. If you want to focus on improving your score, your trusted advisor can give you expert advice to help.
 
Your Loan Type
 
There are many types of loans, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:
 
There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”
 
When working with your real estate advisor, make sure you find out what’s available in your area and which types of loans you may qualify for.
 
Your Loan Term
 
Another factor to consider is the term of your loan. Just like with location and loan types, you have options. Freddie Mac says:
 
When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”
 
Depending on your situation, the length of your loan can also change your mortgage rate.
 
Your Down Payment
 
If you’re a current homeowner looking to sell and make a move, you can use the home equity you’ve built over time toward the down payment on your next home. The CFPB explains:
 
In general, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can comfortably put 20 percent or more down, do it—you’ll usually get a lower interest rate.”
 
To learn more, connect with a lender to find out the difference a higher down payment can make for your new mortgage.
 

Bottom Line

 
These are just few factors that can help determine your mortgage rate if you’re buying a home. The best thing you can do is have a team of professionals on your side. Connect with a local real estate professional and a trusted lender so you have the expert advice you need in each step of the process.

Recent Blog Posts

Stay up to date on the latest real estate trends.

Expert Forecasts for the 2025 Housing Market

Experts are forecasting rates could settle in the mid-to-low 6% range by the end of the year.

San Francisco Market Update - December 2024

Elevated mortgage rates dominated the housing market in 2024, and 2025 may look similar if inflation starts to ramp up again.

East Bay Market Update - December 2024

Median home prices rose slightly in November, which is normal for the East Bay this time of year.

Control the Controllables If You’re Worried About Mortgage Rates

While you may be tempted to wait for rates to fall, it’s really hard to try and time the market — there’s just too much that can have an impact. Instead, set yourself … Read more

SF Market Update - November 2024

The median single-family home price rose 7.7% month over month, while condo prices increased 9.2%. We expect prices to contract over the next three months, which is th… Read more

East Bay Market Update - November 2024

Months of Supply Inventory still indicates a sellers’ market in the East Bay for single-family homes, but for condos, MSI implies the market now favors buyers.

Don’t Miss Out on the Growing Number of Down Payment Assistance Programs

Imagine being able to qualify for $17,000 toward your down payment—that’s a big boost, especially if you’re looking to buy your first home.

The Majority of Veterans Are Unaware of a Key VA Loan Benefit

According to Veterans United, only 3 in 10 Veterans realize they may be able to buy a home without needing a down payment.

Renting vs. Buying: The Net Worth Gap You Need To See

On average, a homeowner’s net worth is nearly 40 times higher than a renter’s.

Let’s Talk

You’ve got questions and we can’t wait to answer them.