With any loan, the riskiest and most fluctuating part for borrowers is the interest rate. However, staying informed about current mortgage rates will help any borrower know when the best time is to purchase a new home or refinance the one they’re in. Breaking things down to simple terms, the mortgage interest rates that your lender will give you are based off of the index and the margin. The index is primarily controlled by the market, which no one can predict. The margin, on the other hand, is set by the lender and is largely determined by your financial situation.
Mortgage Interest Rates Today
Interest has recently sat at all-time lows and because of this, interest rates are still quite low today. However, since the presidential election, mortgage interest rates have risen. The biggest question on everyone’s mind here is how high will they go? Unfortunately, no one can say for certain when mortgage rates will stop rising. At the same time, you can look at the trends over the past few months and see how high your interest would likely be if you were to purchase or refinance with a home loan in the next month.
Another thing you can be sure of is that interest rates will continue to rise for some time. Because interest has sat at all-time lows, we were due for a huge hike. Taking this into account, it makes sense that now would be the best time to take advantage of how low rates currently are if you are already planning on switching mortgages. This will allow you to avoid sharp interest peaks in the future.
Options for Rising Mortgage Interest Rates
While it’s true that mortgage interest rates have been rising since the presidential election, you and your situation also have a lot of say in what your interest rate is. Just a few factors you can control include loan type, loan amount, credit score, and the amount of your down payment. Let’s take a look at each of these.
Loan Type: the loan type you choose to finance your home with will affect how high or low your interest rate is, and subsequently how much you pay in interest over the life of your loan. When considering loan type, you must compare the pros and cons between programs like VA and FHA. In general, you will find that a VA loan interest rate will be much lower than others. Then consider the individual plans those programs have. As an example, VA hybrid ARM loans have very low starting rates, but then that rate could rise after the fixed period is over.
Loan Amount: a lower total loan amount will give you lower interest rates and a higher total will give you higher rates. So, how do you control this? Purchase a house that is at least a few thousand dollars cheaper than your limit.
Credit Score: your credit score has the most influence out of all factors in determining rates. A very low score indicates to lenders that the borrower is not responsible with their money, so there is more risk involved. They will require a higher rate in order to ensure they’re paid back in full. At Low VA Rates, we work hard to offer low VA rates to any borrower, regardless of credit score.
Down Payment: a higher down payment does 2 important things. It lessens the risk for the lender and it lowers the principal amount that you need to pay on your loan. Both effects will lower your interest rate.
Giving You Low Mortgage Interest Rates, Always
No matter how the market fluctuates, we here at Low VA Rates will continue to offer great VA rates for our veteran homeowners. Call us now at 866-569-8272 to talk with a licensed loan officer. We will be able to explain the current interest trends in detail and give you a quoted rate. Don’t hesitate to get your questions answered today.