What Affects My Mortgage Interest Rate?

When people start to go shopping for a home they must first get pre-approved for a mortgage. During this time, they not only need to speak with different mortgage companies, but also do their research on interest rates.

Mortgage interest rates are always on the move. They can change from week to week. This fluctuation has a lot to do with inflation. Mortgage companies must raise or lower rates to ensure that the value they are collecting is not lost. The Federal Reserve is one of the most direct influencing factors. Banks borrow funds from the Fed. If rates change during that transaction, mortgage interest rates change as well. In general, a 30 year fixed-rate loan with have an interest rate below 4 percent.

Now many of you are probably wondering what your interest rate will be. The average mortgage interest do not necessarily indicate what your interest rate will be. Other factors have to be taken into account, those being personal. The type of loan also makes a difference on interest rates. Some mortgage loans include refinance, adjustable rate, and fixed rate. Interest rates are affected differently for each of these loans.

It is possible to lower your mortgage interests rate but you must do so before applying for a mortgage. To do so you must take a look at your credit and make sure it is in top condition. First check your credit and correct any and all errors. Next, maintain a solid payment history and pay your bills on time. After ensuring your bills are payed on time, pay down your debt on credit cards and save money for a down payment. These are a few ways to lower your interest rate while raising your credit score at the same time.

Like I had stated earlier, interest rates are based on many different factors, some that you have control over and others in which you do not. However having a better understand of interest rates and the current market trends can help to ease your mind when starting the home buying process.