When someone is interested in buying a home, there are a number of factors that people need to consider. Some of these include the budget, the size of the home, and the mortgage interest rates.
The mortgage rate is going to play a tremendous role in whether or not someone is going to be able to afford their dream home. For this reason, it is critical for everyone to know how a mortgage rate is determined. There are a number of factors in someone’s financial history that are going to impact the mortgage rate the lender offers.
The Credit Score
One of the most important factors that a lender is going to consider is someone’s credit score. A credit score is a reflection of someone’s risk to the lender. The higher the credit score, the more likely the loan is going to be repaid, in the eyes of the lender.
If someone’s credit score is too low, the lender might not make an offer at all. In order to reduce the interest on someone’s mortgage, it is important to correct any inaccuracies on the credit report ahead of time. This will make someone more competitive when applying for a mortgage.
The Employment History
The lender’s biggest concern is making sure their loan is repaid. In order to make mortgage payments on time, the borrower needs to have a steady stream of money coming in. This means maintaining a steady job.
In order to predict this, the lender is going to look at someone’s employment history. The longer someone has been employed, and the fewer gaps someone has in their employment history, the lower the interest rate on the mortgage is going to be.
The Current Financial Market
Some of the factors involved in a mortgage rate are outside of the borrower’s control. Mortgage rates are also impacted by the current financial market. Like the stock market itself, the mortgage rates are going to rise and fall with the real estate market. It is important for everyone to think about the current financial market when applying for a mortgage.
Thinking About Mortgage Rates
These factors will play a role in the mortgage rate someone is going to be offered. Everyone should think about the interest rate on a mortgage when looking for a home.
Talk about your personal financial situation with your trusted home finance professional. They are a valuable and experienced resource that can answer all of your questions regarding the best fit for your mortgage.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.