Factors That Determine Your Boca Raton Mortgage Rates

Have you ever thought about how your mortgage lender determines your Boca Raton mortgage rates? Well, we think you should know how your interest rates and monthly payments are determined.

Most people want to get the lowest Boca Raton mortgage rate possible and chances are that you are one of them. Unfortunately, even for the most perceptive mortgage shoppers how interest rates are determined remains a mystery.

By understanding the factors that determine how much your mortgage rate will be, you will be in a better position to negotiate your mortgage loan. Not to mention, get yourself ready for the home-buying process.

Numerous tools out there can help you figure out your mortgage rate by simply keying in some of the factors that determine how much mortgage interest rate you have to pay. By having a proper understanding of those factors you will know how a change in them will affect the current mortgage rates on different types of home loans.

If you are able to negotiate a better interest rate even just by percentage points, you might end up saving thousands of dollars over the lifetime of your mortgage. It certainly pays to be prepared.

Credit Score

A borrower’s credit score plays a key role in determining not just their mortgage rate but how much money they can borrow too.

The general rule of thumb to remember is that people who have a good credit score qualify for lower interest rates, unlike customers who have a low credit score. Lenders will use your credit score to determine how much they can rely on you to pay off your mortgage. The credit score information is retrieved from your credit report. A credit report contains information such as payment history, credit cards, and your loans.

We always advise that before you get started on looking at your mortgage options to first go through your credit report and find if there are any errors. If you ever find an error in your credit report your first step should be getting in touch with the credit reporting company and launch a dispute. It takes time to get credit report errors resolved so this is a process that you should start very early otherwise it might inconvenience you when trying to find financing for your dream home.

Home Location

The location of your home also plays a key role in determining your mortgage rates. NHL Lending offers competitive Boca Raton Mortgage rates. Give us a call for a more detailed breakdown of our home mortgage rates for Palm Beach County.

Price of the Home and the Amount You Need To Borrow

The amount of mortgage that the lender gives includes:

• Price of the home
• Closing costs
• Mortgage insurance (optional)

It does not include your down payment. Visit a real estate website like Zillow to find out how much homes around a neighborhood you are interested in go for.

Down Payment

The size of your down payment plays a role in determining what mortgage rates you will pay. When you make a bigger down payment, you are reducing the lender’s risk so you will get a lower interest rate. Even though in most cases you will be asked to make a minimum down payment of 5% for conventional loans and 3.5% for FHA loans if you can manage to make a larger down payment go for it.

When borrowers are unable to make a 20% down payment, lenders in most cases will require you to get mortgage insurance. The mortgage insurance protects the lender when the borrower is no longer able to make monthly payments.

The thing with mortgage insurance though is that it adds to the monthly payments a borrower has to make.

Life of Loan

This refers to how long it will take you to pay back the loan. Usually mortgage rates today will be higher if the life of the loan extends for a long period while the inverse is true. Long-term mortgages have higher overall costs.

Short term loans are characterized by lower overall costs as well as lower interest rates. The monthly payments are higher because the mortgage needs to be paid back in a short span of time.

Type of Interest Rate

Another factor that determines what your mortgage rate will be is the interest rate type. There are two kinds of interest rates:

• Fixed interest rate
• Adjustable interest rate

The difference between the two is that fixed interest rates do not change over time while adjustable interest rates adjust. Adjustable interest rates can go either up or down depending on the market. 

You need to be aware that with an adjustable interest rate mortgage your initial interest rate might be affordably priced. However, you need to keep in mind that there is a good chance that the interest rate will go up in the near future.