home loan mortgage rates

Home Loan Mortgage Rates and Affecting Factors

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When it comes to a mortgage loan, the rates become the most crucial factor of all. In general, the home loan mortgage rates are varying depending on the term and other several factors including the level of risk for your loan that is predicted by the lenders. And the most important thing is the rate changes on daily basis according to the market trends. That is basically the reason why the home mortgage loan applicants wait for the right time to apply for the loan in order to get the best rate. Of course, it is possible for you to get a better loan deal under certain circumstances.

Factors Determining the Mortgage Rates

Learn the basics regarding the factors that affect the mortgage rates first. The type of loan becomes the first factor. Every bank offers various types of loan and each type has certain interest rates. Therefore, what you have to do is to find the right type according to your need.

The second factor is your credit history. Good history allows you to have better deal for the interest rates. It is possible because the lenders have more confidence in you as the borrower considering your good credit history. In other words, it is less likely for you to have issues during the payments. The third factor is loan amount. There is minimum and maximum range for the rates. A smaller loan amount doesn’t allow you to negotiate with the lenders regarding the rate’s amount. On the other hand, bigger loan amount gives you better bargaining position to negotiate on the rate’s amount.

How Down Payment Affects Interest Rate

The fourth factor is the amount of your down payment. Usually, minimum down payment is around 20% of the total real estate value. However, if you can pay bigger down payment which means more than 20%, it is more likely for you to get lower interest rates. What a great offer, right? Well, this is a common practice among financial institutions across the world. You should always be aware of this fact.

The fifth factor is the loan’s term. The typical home mortgage loan term in the US is from 15 to 30 years. If you do want to get lower home loan mortgage rates, you should choose shorter loan term. This means you should pay bigger for the monthly payment. But in the long term, it saves a lot of your money. Which the best deal for you is depending on your overall financial situation after all.

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