How Interest Rates Work
The day has finally arrived: you’ve searched for your dream home and it’s time to make one of life’s biggest purchases! There is quite a lot of terminology floating around and one phrase you may hear often is ‘interest rate’. This is a crucial aspect of the mortgage process and it is best that you understand the ins and outs of what it entails. From there, you can map out a strategy to get a great deal when acquiring a property. Here is a brief overview of what interests rates are and how they affect home buyers like you.
Of all the principles of mortgage: interest is arguably one of the easiest to grasp. It’s essentially the fee that lenders charge to ensure compensation for letting you borrow money. You start off with a principal balance [the base cost of the property] and interest accrues in addition to what you are expected to pay regularly. This percentage of your loan balance is calculated from a variety of factors and can fluctuate on individually and also on a larger economic scale.
As stated, there are many factors that dictate mortgage percentage that are mostly out of your hands! Unemployment rates change year-to-year; when it’s high, mortgages are low and vice versa. Also, when the stock market is not performing well – you can expect reduced costs. Additionally, interest hinges on the overall trajectory of inflation – when it’s high – properties also fall into that category: so expect a spike! But not to worry – with Minute Mortgage, fair interest rates are our thing. Stay up-to-date on market trends daily and weekly! [*link to rate page*]
In The Clear
Though some things are out of your control – there is a lot that you can do to secure a low interest rate. Show lenders that you make payments on time, and that you have debt in check. A good practice is to routinely review the state of your credit — a high FICO score is a green flag for mortgage companies. Also, stash cash in advance to prepare for a downpayment. The more you offer upfront, the less your rate will be (as long as you’re in the clear when it comes to other financial delinquencies).
It’s true: some mortgage companies just have lower rates than others! This is a major point to consider when looking to borrow with a reputable company. At Minute, we understand that your investment is a commitment, and low interest helps support your budget. If you’re not sure about loan packages or which rates you’d likely qualify for — we can help! Our knowledgeable experts offer transparent and reliable information, and will guide you through each step when securing your dream home!