There are a plethora of factors that can affect the rate of your home loan, many of which you can control, though others are subject to outside influences. Pamela and the team at Finance of America Mortgage are proven experts in the numerous complex nuances of the home lending process.
From strengthening your personal credit scores to understanding the impact of market fluctuations, Pamela and her team will work with you to make the lending process less intimidating, less stressful, and -most importantly- they'll match you with the loan program that best suits your individual needs.
What Determines a Rate
No doubt, if you've been shopping for a mortgage you've probably seen a wide range of interest rates and wondered how they can all be so different. Several factors go into determining what your interest rate will be for your mortgage, the most important being your credit score.
There are many different types of mortgages and factors that go into determining each of their rates. If you're refinancing your mortgage and taking cash out you'll likely pay a higher interest rate than if you're purchasing a new home. Special programs such as Federal Housing Administration (FHA) and Veterans Administration (VA) loans offer lower rates to qualifying individuals while Jumbo, or non-conventional, loans tend to charge a higher rate due to the greater risk of lending a larger sum of money. Additionally, adjustable rate mortgages (ARMs) will offer you a lower, initial rate for a set period of a time; while fixed rate mortgages have higher rates but offer a consistent rate for the life of your loan.
The longer your mortgage term -the amount of time in which you commit to paying back your loan- the higher your interest rate. In most cases, you'll pay less interest on a 10, 15, or 20 year mortgage versus a 30 year mortgage.
The general health of our economy and housing market have the greatest overall effect on interest rates as a whole. The strength of the U.S. dollar globally, inflation, and the stock market all play a large role in determining lending rates. As a general rule, interest rates are higher when our economy is strong and growing, while rates will tend to dip when it is not.