Non-Financial Factors That Affect Home Loan Interest Rates
December 30, 2024
One factor is occupancy type. For FHA loans, this is straightforward because these loans require owner occupancy. Investment properties aren't eligible. While conventional loans may have different rates for primary residences, second homes, and investment properties, this isn't a concern with FHA loans.
Some might not immediately know which loan is best for them, but knowing the occupancy requirement ahead of time can help them make a more informed choice.
Your employment history is another factor. A stable job with consistent income shows lenders you're reliable and can make your mortgage payments. They'll look at how long you've been employed, your income stability, and your industry. Building a strong employment profile can help you get a better interest rate if the lender feels that history shows you are a good credit risk.
The loan term and payoff schedule also play a role. The loan term affects your monthly payments and total interest costs.
The amortization schedule determines how your payments are applied to principal and interest over time. Your lender may offer different interest rates for a 15-year loan compared to a 30-year mortgage, for example.
Standard amortization has early payments mostly going toward interest, while graduated payment mortgages have payments that start lower and increase over time.
Your income projections and financial goals will influence your choice of amortization schedule, and your lender may offer different interest rates for different loan terms and amortization schedules.
Remember, lenders consider various factors when determining your FHA loan interest rate. Understanding these factors can help you make informed decisions and potentially secure a lower rate.
FHA Loan Articles
April 11, 2021With the trend of falling interest rates since 2019, the number of mortgage refinances around the country has spiked and continues to rise. Borrowers with FHA loans can also capitalize on the low rates, but it may be possible to simplify the process with the FHA Streamline Refinance.
April 3, 2021Borrowers can choose to refinance for several reasons, but it comes down to prioritizing different benefits. One homeowner may want the lowest possible monthly payment, while another might want the shortest possible term for their loan.
March 29, 2021The FHA helps first-time and low-income homebuyers by having lower down payment requirements for its borrowers. Despite this lower credit eligibility criteria set by FHA, it is important to remember that FHA-approved lenders can set their own requirements
March 24, 2021One of the major arguments people have for renting instead of buying is the large upfront cost of a down payment. Depending on the type of loan program you apply and are approved for, this could mean anything between 3.5% and 20% percent of your purchase price.
March 21, 2021The two basic types of home loans are fixed rate and adjustable-rate mortgages. The mortgage market offers many other options to homebuyers, but these two are the most common, and the first pair from which to pick.
