As the world watches for clues about the direction the economy is going, the somewhat volatile stock market continues to have a positive impact on mortgage rates - but no one is quite sure how long that will last. According to Freddie Mac, mortgage rates have continued to trend downward, and the 30-year fixed-rate mortgage is now near a 2-year low.
What can that mean for you?
Rates for home loans are changing constantly and are difficult to predict. If you’re considering purchasing or refinancing a home, now may be the perfect time to do so.
While home loan rates are historically low, the rate that you qualify for is determined by looking at a number of different factors. This is known as risk-based pricing. When a lender approves a borrower for a loan, they trust that the borrower will be able to pay back the amount financed. In order to determine how risky a borrower might be, lenders will consider a number of things. These include your credit score, loan-to-value (LTV) on the property, property type, the size of your down payment, and the actual loan type you choose. Learn more about how your interest rate is determined.
Your Credit Score
Your credit score is the key to getting the best rate on your mortgage. Scores above 740 will often qualify you for the best mortgage options, higher loan amounts and lower interest rates. As your score decreases, the riskier you seem to a lender.
The good news is that there are a ton of options out there for people with credit scores under 740, but you’ll likely be paying some higher interest rates. If you’re unsure about whether you can qualify or not, check out our ebook, A Guide to Understanding Your Credit.
Mortgage rates are changing every single day, but they have remained in the lower range for quite some time now. If you’re in the market for mortgage financing, it may make sense to go ahead and get pre-qualified. You can get started with Eagle Home Mortgage’s Digital Mortgage, where you can automatically connect your bank statements, tax records and income documentation in just minutes.