When you’re shopping for a mortgage, you want the lowest possible home loan interest rate. After all, the money you pay in interest doesn’t help pay off your balance – those funds go to your lender. And, the lower your rate, the less you’ll end up paying for the privilege of borrowing their money.
In general, interest rates are based upon how much of a risk the borrower represents. To be more specific, the price you’ll pay in interest on a home loan will depend upon several factors.
Lenders look at your credit score to predict how reliable you may be in making your mortgage payments. Typically, people with higher credit scores tend to receive the lowest interest rates.
Borrowers who make larger down payments have more at stake, so lenders see them as posing a lower risk. As such, those who can put down at least 20 percent usually get pay less in interest.
As a general rule, mortgages with shorter terms come with lower interest rates. So, if you opt to pay off your home loan more quickly, you may receive better offers from lenders.
Adjustable-rate mortgages often have an initial fixed period when the interest is low. And compared to fixed-rate loans, the interest may be quite favorable – however, you could end up paying more later on.
Home loan interest rates can significantly differ depending whether you go with a conventional loan, FHA financing, a VA loan or another mortgage program. To secure the best rate, you’ll need to compare your options.
Some lenders offer different rates for homebuyers in different areas. The location of the property you plan to purchase may not always make a difference in the offers you receive, but it can be a factor.
The amount of financing you need will affect your mortgage rates. Generally speaking, conforming loans – or those under $484,350, the current limit set by the Federal Housing Finance Agency – come with the lowest rates.
Are you ready to shop for a mortgage? The professional team at Intercap Lending, a leading Utah loan provider with decades of experience, can help you compare home loan interest rates and terms to find a solution that meets your needs.
Intercap Lending makes shopping for a mortgage easier. We’ve helped thousands of people in northern Utah successfully navigate the path to home ownership, and we can do the same for you. For expert help exploring your mortgage options and finding the lowest possible home loan interest rate, contact us today.