Knowing the factors that affect interest rates is a key step in deciding what type of mortgage product suits you, and when to move forward with a new home loan. Some factors are related to the details of your loan application, while others result from the economy as a whole. Carlyle Financial mortgage brokers will equip you with the resources you need to understand mortgage and refinance home loan interest rates.
Evaluating Your Scenario
There are several components of your home loan application that will impact your particular interest rate. Major factors include:
- Loan to Value – The amount of equity in your home can impact the home loan interest rate that you’re eligible to receive. Buying a home with a larger down payment or refinancing a property with more equity can result in a lower interest rate.
- Credit Score – Lenders use your credit score to predict how you will use your credit in the future. Your mortgage banker can analyze your credit report with you to ensure that it is accurate and up-to-date prior to submitting your home loan application and help you address any issues that may improve your credit score.
- Loan Amount – The actual dollar amount of the mortgage you’re requesting can impact the interest rate you’re eligible to receive. Interest rates may adjust depending on if your home loan qualifies as a regular conforming (up to $424,100), high-balance conforming (up to $636,150 depending on location) or jumbo loan product. As home loan limits are based on the property type as well, loan limits and interest rates will vary if you are buying a duplex or a four-unit property.
Market and Economic Factors
There are numerous market factors that affect mortgage rates. You’ll notice that there are several market indices listed on this page that deal with stocks, bonds and commodities such as gold and crude oil. While all of these are influential on the economy, inflation and consumer pricing, U.S. Treasury bonds are widely considered by the majority of economic experts to have the most direct influence on mortgage rates.
It is also common for any number of economic reports to impact rates, including:
- unemployment levels
- job reports
- home sales
- consumer confidence
As you’re considering what product to choose and when to lock your mortgage rate, know that your mortgage banker is available at any time to discuss the factors that affect your home loan and help you make an informed decision.