Factors Affecting Your Interest Rates

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The interest rates in your mortgage are dependent on a number of factors, some of which you can control and some you cannot. These include real estate market conditions often based on the state of economy), the amount of the downpayment, the length of the loan, closing costs, total mortgage loan amount, and whether or not the mortgage rate is adjustable.

In order to have the lowest rates possible, you can do something about the factors you can control, which include your credit history and your income. Lenders typically like to offer attractive rates to people who they think are more likely to pay back the borrowed money in full and on the agreed time. When it comes to individuals with questionable credit scores or non-permanent occupations, there chances of getting an attractive mortgage interest rate could be slim.

Credit history

History of bankruptcy will usually lower your credit score. This means that there’s a higher risk that the borrower won't be able to pay off the loan, so the lender charges higher interest rates to make sure they are protected. Other factors that can lower your credit score include defaults or late payments, closing accounts, fines, and amount owed. For instance, owing more than 35% of your credit limit can lower your credit score.

Income and employment

How much you earn will also determine if you are a candidate for low interest rates or not. Depending on your financial situation, you may be able to deduct mortgage expenses such as points and interest expense from the income tax.

What makes a desirable mortgage rate

A desirable mortgage rate should be well within your budget, should have a low interest rate, and should be payable at the quickest time possible. A good mortgage rate is easier to acquire if you have a good credit score, no history of bankruptcy, and hold a stable job.