There are quite a few important factors that combine to help you get a mortgage rate for a house. The trick is to know what these factors are and how you can manipulate them or work them to your advantage, which in this case would mean getting the best home mortgage rate you can in 2019.
Keep reading to learn more.
Your Credit Score
Your credit score is a combined representation of a prediction of a credit scoring company. If you have a bad credit score, you might not be very consistent at making your outstanding balance payments. Maybe you don’t pay your full bills and opt for the minimum due.
That’s okay. But credit scoring companies are going to see that behavior and predict it won’t change, thereby awarding you with a lower credit score. On the other hand, if you make your payments in full, consistently, and don’t max out your credit cards, you’re going to have a better credit score.
Credit scoring companies are constantly searching for new and better ways to predict the actions of the everyday consumer. The better they can predict how you spend your money, how often, on what, and whether or not you pay your bills will determine, in part, the score they give you.
That score will, in turn, determine the type of home mortgage rate you’ll get in 2019. If you’ve shown yourself to be a responsible credit card owner who has established good and regular habits of paying off debt in the past, you’ll be well on your way to getting a good mortgage rate.
Home mortgages can have a fixed or variable interest rate or even a combination of the two. A variable interest rate will likely start lower than a fixed, but there’s always the chance it will increase in a rising-rate environment.
Fixed interest rates will cost more right off the bat, but they will remain stable throughout any sort of rate fluctuation that could cause you to pay more on a variable rate.
Your interest rate is something you and your lender will work out together, but it’s still an important component in figuring out the type of home mortgage CPN loans you qualify for.
Where Your Potential Property is Located
Where you’re planning to build your home will make a big difference in the type of loan you get. Expensive areas will impact your loan options differently than inexpensive areas. Rural areas versus urban areas will also change things up.
Do some research on property prices in the area you’re looking to purchase in. This will help you have a good idea of the type of loan you’ll need.
Your Down Payment & Length of Loan
The more equity you invest in your loan, the happier your lenders will be. There’s a fair amount of risk associated with building a home, so the more money you can give upfront, the more likely your interest rate will be lower. In addition, the sooner you can pay your loan off, the better.
If you are willing to pay more on your down payment and choose a shorter period of time to pay off your loan, that will go a long way in convincing lenders that you mean business and deserve a good mortgage rate.
Cost of the Home and Cost of the Mortgage
How much your home is going to cost determines the cost of the mortgage in question. Depending on the area you’re building in and what your house is going to look like, your mortgage could fall into one of three different categories:
- Conforming: These CPN loans are up to $424,000.
- Super Conforming: These CPN loans fall between $424,000 and $636,150.
- Jumbo: Loans in this category max out past the upper level of super conforming loans.
The higher the loan, the higher the interest. Use this understanding to your advantage by following the tips we’ve suggested above: work hard to keep your credit score solid and good, think about which type of interest rate would best suit your needs, do research on where your home is located and the prices of other homes in the area, pay more on your down payment and opt for a shorter loan length.