Search:

News by Subject
Complete list of specialty news sections.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Mortgage Industry News
Subscription-based news for people who work in real estate finance.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories for your web site or for your RSS reader.

News Archives
Archive of news entries.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Graphs
Directory of lenders, branch operators and mortgage service providers.
home advertise email RSS about us
 
HOT Topics Rates Glossary LO License Search
Consumer Mortgage News
Free mortgage news for current and prospective borrowers from a leading online mortgage industry news publication.



How to Get Lowest Mortgage Rates

Understanding what factors affect interest rates

March 22, 2018

By PAT SETTER The San Diego Union-Tribune (Tribune News Service)



Securing a home loan is probably one of the most stressful parts of buying a new home. To get the best loan possible, it's important to know what factors affect interest rates -- a fraction of an interest rate can translate into thousands of dollars less or more over the life of a loan.

"When rates increase by 1 percent, a buyer loses 10 percent in purchasing power," said Michael Deery, a mortgage specialist and president of Citywide Financial Corp.

Since December, interest rates have gone up three-quarters of a percent and are now in the 4.375 to 4.5 percent range for a conventional loan.

In actual numbers, Deery said, that means a buyer who could afford a $600,000 home in December can only afford a $555,000 home today.

That's why it's more important than ever to get the lowest interest rates possible.

The single biggest factor a homebuyer can control in getting lower interest rates is their personal credit score. A high credit score generally leads to a lower interest rate. For a conventional loan, that score should be 740 or higher. (A good credit score is above 700 and an excellent credit score is above 800.)

Credit rates should be checked once a year. If you're planning on buying a home, a credit rate check should be one of the first things you do, so you will have time to fix any errors or improve your score, which may take some time. Paying down credit cards, if you have a high balance, is a good way to get started, Deery said.

The amount of a down payment will also affect interest rates: The higher the down payment, the lower the interest rate. Loans with a standard 20 percent down payment will have a lower interest rate, but that is often not an option in San Diego's pricey home market, especially for first-time homebuyers. Mortgage plans that require borrowers to pay only 3 to 5 percent down are abundant, but those loans will then require private mortgage insurance. The insurance is either added to the cost of the monthly loan payment or absorbed in higher interest rates.

San Diego's steep home prices also result in higher interest rates because of the amount of the loan. Higher loans come with higher interest rates. The standard -- or conforming -- national loan limit, set by the Federal Housing Finance Agency, is $453,100. High-cost areas, such as San Diego, have a limit of $649,750 for a single-family home. But that high-balance loan limit comes with higher interest rates, usually by an eighth or a quarter of a percent, Deery said.

Fannie Mae-backed loans are also higher for condos than for single-family homes if the down payment is less than 25 percent, he said.

Also consider the length of a loan. Shorter terms have lower interest rates, but the monthly payment will be higher because you'll have less time to pay off the loan.

If you're planning on staying in your home only for a short time, you might want to look at adjustable-rate mortgages instead of fixed-rate loans. Fixed-rate loans don't change over the life of the loan. ARM rates often start out fixed for a few years and then fluctuate with the market. The initial interest rate is sometimes lower than in a fixed rate, so if you're planning on selling your home after a few years, an adjustable rate could save you money.

For those who plan on staying in their home for a longer period, fixed rates are a safer option. "We're moving into a higher interest market in the next few years," Deery said.

next story

back to home page


To see more of The San Diego Union-Tribune
or to subscribe to the newspaper, go to http://www.sandiegouniontribune.com

Copyright (c) 2018, The San Diego Union-Tribune

Distributed by Tribune News Service.


This story was distributed by TNS - Tribune News Service
 
Refinance News
News about refinance programs, pricing and production.
H A R P 2.0 News
News stories about the H o m e Affordable Refinance Program including expanded program guidelines.





Copyright © 2016 MortgageDaily.com
MortgageDaily.com Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

pricing engine directory

wholesale lender directory

More Mortgage News Resources (MortgageDaily.com full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

free mortgage news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

refinance news

reverse mortgage news

sales blog

secondary marketing

servicing news

subprime news

wholesale lenders

wireless mortgage news