For many American’s having a mortgage loan is necessary in order to purchase a house. With all the other financial responsibilities which are ever increasing, often savings are not sufficient to cover the full cost of a new home. Interest rates are singularly the most influencing factor that determines the borrower’s monthly repayment amount. They are the among the most important factors to consider when comparing loan offers.
They fluctuate considerably, but a borrower can increase their chances of qualifying for a fair interest rate by having a good credit history as well as a stable source of income and enough down payment to cover closing costs and a decent deposit. If you have a good credit history you are generally considered lower risk for lenders therefore are more likely to be offered a lower interest rate.
The U.S. Federal Government regulates borrower qualifications for FHA, VA, and USDA loans and ensure they remain available for middle to low income individuals and people with not so good credit ratings. They also back these loans with insurance. However conventional loans interest rates can be just as low as the Government backed loans.
The variety of mortgages available is wide so your choice will come down to what suits you best and the best interest rates you can secure.
Working out how long you will live in your new home and the monthly repayment you can afford as well as giving your financial situation an honest assessment will determine what kind of mortgage and interest rate is best for you. Look at each loan program and interest rates offered and request loan estimates to make the process as accurate as possible.
Don’t forget about considering the additional fees and costs which are associated with a mortgage application and origination. Ask the right questions about your lender’s policies on locking and floating interest rates and request a breakdown of fees so you know exactly what to expect. The more you know about each loan, the process of comparing mortgage will be easier.