INTEREST RATE
1. What is your credit score? FICO or credit scores will affect your rate. The higher your score, the lower the interest rate. Check your credit report at least twice a year. If you believe there is an error that is lowering your score, contact your mortgage lender for help getting it corrected immediately. That could save you thousands of dollars in interest pay- ments. 2. What is your down payment per- centage? The greater the down payment you are able to invest, the lower the interest rate. As your loan to value (LTV) drops, so does your rate.
Shopping for a new mortgage loan can be time-consuming and stressful. We all want to make the right decisions for our families and ourselves. There are many choices today with the different types of mortgage products available and the ever- increasing number of mortgage lenders who would like to help you with your loan. The first question I am usually asked, and generally the first question on the minds of many borrowers thinking about a new mortgage, is: What is my interest rate? Borrowers are naturally rate-conscious and want an honest rate. At least 15 factors can affect your interest rate including, but not limited to, the list below. Without knowing the answer to each of these questions, a lender cannot quote you an accurate rate. Additionally, a rate quote doesn’t mean much unless it is first “locked” by the lender. Rates fluctuate daily and, unless your rate is locked, it could change by the time you reach the closing table. To secure and “lock” the best rate avail- able, your lender should address the following issues with you.
3. What is your loan amount?
4. Do you want 100% financing?
5. Do you want a fixed or adjustable note? Choosing an adjustable rate note (ARM) will lower your rate. 6. What terms do you prefer? A shorter term mortgage, 10 or 15 years, will offer a lower rate than a 30 or 40-year term.
7. Do you want a negative amortization loan?
8. Do you want interest only? Depending on the lender, rates can be adjusted upward .50% to .75% annually with an interest-only loan. Your minimum payment requirement, however, will probably be lower versus the fixed rate.
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