When you want to get a home loan, a lot of different factors will affect how high or low your home loan rate will be. These important factors will be taken into consideration by the lender you are dealing with and they will decide what kind of home loan with what interest rate you qualify for. Of course if you learn what these factors are and you can change them in some way, maybe you will be able to get a deal which is a lot more to your benefit then if you went with the first option the loan company offered you. So if you want to learn about these factors, please keep reading since in this article we are going to talk about just that.
Lenders usually advertise the lowest rate they can offer borrowers and this rate will usually go up if the borrower doesn’t have the best possible circumstances which they usually don’t. But it still doesn’t mean we can not learn what factors affect home loan rates and try to control them to our benefit. The following factors have the most effect on interest rates going higher or lower:
1. Your credit history
Your credit history plays a big role for your interest rates being decided. The better your credit history is, the more chance you will have for getting a better interest rate.
2. Employment situation
It goes without saying if you have a stable income and your employment circumstances are looking good, lenders will trust you more and offer you better rates.
3. Amount of your income
The higher your income is, the better rates you will get. All lenders want is to feel they can trust you to pay your payments on time.
4. The amount of down payment
The more down payment you pay at the beginning of the loan, the lower interest rate you’ll have to pay later on.
5. What the age of the loan is
6. Purpose of the home
It’s important for lenders to know what the purpose of your home is, this will affect your interest rates quite a lot.
7. Age of the loan
These were the main factors deciding your interest rates, but some other factors may also affect interest rates, but the ones we mentioned are the most important ones which if you learn enough about, you will pretty much be doing everything you can for your interest rates. You should also know the fact that if you want to live in the house you want to buy, or if you want to invest in it, will affect the interest rates you get.
Is the location of your house important?
This may not be fair, but a lot of lenders take this factor into consideration and affect your interest rates by it. This is because some lenders prefer not to finance in some certain areas. One of the main reasons behind lenders not feeling comfortable with offering loans in some areas is them not having a good chance of reselling the house if the whole process ends up in foreclosure. Of course since the location of the house affecting the rates is not a fair thing, a lot of actions have been taken to put a stop to it, but since a lot of different other factors affect how high or low rates will be for certain home loan, no one can really prove if the loan company is doing this discriminatory act or not. The only thing you need to know is that sometimes the location of the house you want to purchase will affect your rates.
Why the variety of interest rates among lenders is a good thing?
If you want to get a home loan and you search through different lenders, one thing you will find out is how much different rates lenders will offer you. This is because some factors are more important to some lenders than others, this will be resulted in you being able to search around enough to find yourself a loan deal which meets your needs the best. This kind of flexibility is good news for anyone who’s looking for getting a home loan. So make sure to research enough before making a decision since if you do, you can find a much better deal which may save you thousands of dollars.