Shopping around for the best possible mortgage terms is an important part of the home buying process. A few percentage points can make a difference of thousands of dollars over the life of the mortgage. Mortgage rates can be a bit of a mystery—especially for first-time homebuyers—so here’s an overview of the most important factors.
YOUR FICO SCORE
This is the part of the mortgage equation that should come as no surprise. From a lender’s perspective, your financial history is the best indicator of whether you’ll be a stable, responsible borrower. It’s the primary factor in determining your mortgage rate, so if you’re planning on purchasing a home in the near future, concentrate first and foremost on improving your FICO score.
LOCATION AND SIZE MATTERS
“Location, location, location” is an old cliché in real estate, but it also applies to mortgage rates. The city, county, and state that you live will factor into your mortgage rate. Mortgage rates can also vary among local lenders and the size of the loan will come into play. The more money you borrow, the higher your interest rate is likely to be, unless you’re also increasing your down payment.
LOAN LENGTH AND TYPE
Lenders incentivize shorter mortgage terms with lower mortgage rates, so you’ll get a more favorable rate for a 15- or 20-year mortgage versus a 30-year mortgage. If you can afford the higher monthly payment, you’ll pay much less in interest over the course of the loan term.
About Windermere Real Estate
In just over 5 years, Southern California-based Windermere Homes & Estates co-owners Rich Johnson and Brian Gooding have opened 17 offices and have had over 500 agents join their team. Winners of the Brokerage Achievement of Excellence, awarded to them by the San Diego Association of Realtors® (SDAR), Windermere Homes & Estates was also honored to be the first recipient of the new annual SDAR Award given for standard of ethics, commitment to compliance and high regards for running their business.
Windermere Real Estate is ranked the largest regional real estate company in the Western U.S. with over 300 offices and 6,500 agents serving communities in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington, and Mexico. Last year, Windermere closed over 86,000 sides for more than $31.7 billion in dollar volume. The Windermere family has a proud heritage of serving our neighbors via the Windermere Foundation which funds services for low-income and homeless families. Since 1989, the Windermere Foundation has contributed more than 38 million dollars towards improving lives in the communities where we live and work. For more information, visit www.windermere.com.