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When you apply for a mortgage loan, the lender will decide how much interest to charge based on a wide range of factors. While some of these determinants might be out of your control, you may be able to receive a lower rate by taking the right steps. Learn more about what could increase your interest rate to make some changes and save money.

What Factors Impact Interest Rates?

1. Price of the Home

Before shopping for a home, you must have a reasonable budget in mind. The more expensive your home is, the higher your interest rate is likely to be. That’s why you should decide how much you can spend before applying for a mortgage. The amount you’ll need is the total cost of the home, plus any closing costs, minus the down payment you make.

2. Credit Score

mortgage loanWhen applying for any loan, your credit score will make a difference. If your score is low, your interest rate will be higher. If you already know your score is low, take some time to boost it up before buying a home. Do this by paying your bills on time and in full, and keeping your credit utilization low.

3. Mortgage Loan Terms

With a fixed interest loan, you’ll pay the same amount of interest until the loan is paid off. On the other hand, adjustable interest rates start low but can fluctuate after a certain period. Sometimes, this is good if the interest rate drops. However, interest rates can also become much higher, to the point where the loan is impossible to pay.

4. Down Payment

The bigger the down payment you make, the lower your interest will be. If possible, try to put down at least 20% of the price of the home. While you can often secure a house with a down payment as low as 3%, this will increase mortgage costs quite a bit.

 

Finding the right mortgage loan is often harder than one might think. If you’re in search of your dream home in North Richland Hills, TX, Deuane Woodard is here to lend a hand. Whether you’re a first-time buyer or you don’t have the greatest credit history, this trusted loan consultant will use his three decades of experience to help. Call (817) 875-6043 to schedule a consultation, or visit their website for more information on home loans. 

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