Factors That Influence Your Obtainable Interest Rate04/23/2010 The process that determines a mortgage rate are quite detailed. There are many factors that influence mortgage rates. The economy as well as the stock market and bond market can have a huge impact on initial interest rates. That is something that you can research at another date. We are going to focus on your current situation and the impact it has on a mortgage rate. Are you a first time home buyer? Is this a investment property? The answer to those questions will impact your mortgage rate. If you do not plan to live in the home then the lender automatically considers this an investment property situation. The rates for this type of lending can be 2% or more above a loan for a owner-occupied home. This is related to risk. The mortgage rate will be higher for a loan that is considered a higher risk for the lender. If your situation results in lower credit scores or a weak payment history, your options might be limited to a sub-prime mortgage company. Often times people anticipate their scores to be much lower than they actually are. A fair home loan can often be obtained with a score of 620 and higher. If your score is less than 620, it is possible to find a lender that can help you. Another thing to consider is your level of debt. If your credit report reflects missed payments on your debt, it is possible you owe more than you can handle. Your debt level compared to your income is an important calculation, or ratio, that a mortgage lender uses to help you get your loan. If this ratio is higher than normal, it could signify that you are a riskier borrower which would result in a mortgage rate that is higher than normal. |
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