In any home loan situation, we all naturally want to get the best mortgage rate. A slightly better rate can equate to thousands of dollars in savings over the life of the loan, and on the flip side, a few points higher can turn an affordable mortgage into an unaffordable one.
At Altius Mortgage Ogden and our partners, Altius Mortgage, we’re here to help you find the best possible rate and loan format to fit your needs. For many clients, we find that a simple understanding of the major factors involved in influencing mortgage rates can be very helpful. Here’s a breakdown.
In a general sense, a larger principal loan amount will come with a higher interest rate. The whole point of interest in the first place is to mitigate some of the risk the lender is taking by lending this money – a larger loan means more risk, and therefore higher rates.
Mortgage rates will differ between fixed rate loans and adjustable rate loans, the two primary types available. Fixed rate loans start with higher interest rates in most cases, but you also get the knowledge that these rates won’t go up at any point during the life of the loan. Adjustable rate loans, though, will start at a lower amount – but the risk is always there that they could go up if the market dictates it.
Many lenders simply require a 20 percent down payment, and if you can go higher than this, even better. Once again, it’s all about risk, and a larger down payment means less risk for the lender.
Mortgages can come with varying term lengths, usually between 10 and 30 years. Shorter terms generally come with lower rates, and vice versa.
The market itself will often be the largest individual factor in dictating interest rates. Many of these factors are outside your control, and all you can do is keep an eye on the market and capitalize at the most opportune times.
Your credit score is a reflection of several major credit bureaus’ assessment of your creditworthiness – your ability to manage and repay lines of credit. The higher your score, the better your rates and the more loan options you’ll have available to you.
Want to learn more about the key factors in mortgage rates, or find out about any of our other services? The brokers at Altius Mortgage Ogden are standing by.