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These 5 Things Determine Your Mortgage Rates, But You Can't Modify Them At The Last Minute

8 February 2018

Eva Kennedy

Of the numerous factors that influence the interest rate on your mortgage, there are some that you can't modify or change at the last minute. Here are examples of such factors:

Your Job

There are several ways in which your job affects your mortgage rates. For example, your job determines your earnings and also affects your income-to-debt rate. Also, the stability of your job (determined by your industry and how long you have been on the job) also determine the level of risk you present to the lender. Unfortunately, you can't change your job at the snap of the fingers to qualify for a cheap rate.

Your Credit Score

This is one of the most well-known factors that determine mortgage rates. Your credit score reveals how good you are at meeting financial obligations, and your lender uses the information to determine your risk level. Unfortunately, it takes time to build a strong credit score; this is not something you can change once you are in the lender's office.

The Home Use

The type of home you want to buy also determines your mortgage rates. As a rule, lenders place high mortgage rates on rentals and commercial properties as compared to primary residences. That is, if you are buying a home to live in you will typically pay lower rates than if you were buying the same home to rent it out or use as an office. Would it make sense to change your target property from a primary residence to a rental property just to attract lower rates? For most people, the answer is a clear no.

The Economy

The economy affects the whole financial industry, including mortgage rates. Rates typically rise as the economy improves and falls as the economy tanks. As an individual borrower, there is nothing you can do to change the economy even if you tried.

The Location of the Target Home

Lastly, it may also be difficult to change your home's location to enjoy favorable mortgage rates – even though you can. Mortgage rates generally vary by state, but it can also vary within the same state. For example, an urban neighborhood may attract different rates from a rural neighborhood even if they are in the same state. Still, it is usually impractical (at least for most people) to move from one state to another or even from one city to another to enjoy low rates.

Fortunately, there are other rate-determinant factors that you can modify even at the last minute. This includes things like the loan term, the type of rate (variable or fixed), and the down payment, among other things. Don't forget that different lenders have different rates so shopping around may help you land great rates too.

Contact a company like Mortgage Edge for more information and assistance. 

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