When it comes to home loans, there are usually three numbers that borrowers pay attention to. The first is the total amount of the mortgage, in order to make sure that the amount covers the cost of the home. The second is the amount they are going to pay each month, which affects how easily they’ll be able to make payments.
But the third, and arguably the most important, is the interest rate of the loan. This determines not only how much you pay each month, but how much you’re investing in the property in the long term. To show you how important interest rate is:
30 Year Mortgage, $250,000 Home Loan, 3.5% Interest Rate:
30 Year Mortgage, $250,000 Home Loan, 4.5% Interest Rate:
That 1% increase in the interest rate represents an increase of $52,000 spent on the mortgage during the course of the loan. Interest rate is very important.
But how do lenders determine interest rate?
Many different factors go into determining your interest rate. These including your personal risk profile, the type of loan, the current economy, and the federal government. Some of the factors include:
Those are several of the factors that go into determining your interest rate. But what makes the interest rate change over time? Mortgage interest rates change frequently due to issues that include:
Mortgage interest rates are complicated and ever changing. The best way to truly understand these interest rates is to talk to a loan originator. Interest rates are still low, but they are starting to go up. Contact a loan originator at Open Mortgage to discuss your potential interest rate today.
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