Mortgage rates are hard to understand. After shopping around, you will realize that the quoted rates are not the same as the one advertise. There are some major factors that will determine the mortgage rate. Remember that this vary from one customer to another.

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• Credit score: Borrowers don’t realize that credit score is something that could affect their interest rate and it is hard to predict how much it is. Lender groups often give those with good credit scores the best rates. Even if you have a low credit score, you can still get mortgage. It is essential to monitor your credit score.

• Location: The place where you live can affect the interest rate. Many people may not be aware but rates vary where you are in world. Although there is no written rule, it can be concludes that place with high cost of living will incur high interest rate. States with high interest rates include New York and California. Sample of low cost areas are Texas, Idaho and Wyoming.

• Points: This is the reason why the interest rates on the ad are not the same when in the actual loan. This is due to the fact that it doesn’t include points. Points are prepaid interest that can lower down the interest rate. Every point can lower down the mortgage by one eight.

Mortgage Rates

• Down payment: When buying a property on a loan, this is very important factor to consider. The size of the down payment could affect the interest rate. For lenders, small down payment is seen as risky so it will be charged a high interest rate. Remember that putting less than 20% down will mean buying mortgage insurance. It will give the lender a protection in case of default. The annual charge of the insurance is about half percent of the loan. The rates of loan with insurance may vary.

• Lender: As we all know lenders are different from each other. The interest rate will vary depending on which lender you apply. They offer various programs and structure their loans in various ways. Your friend might get a lower rate but not the best deal for you. For this reason, you might want to compare deals. When shopping around for a loan, you are looking at the best deal and the lowest mortgage rates in San Francisco. This is due to the fees and the closing cost that are embedded on the loan.

This entry was posted on Tuesday, August 27th, 2013 at 3:39 pm and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.