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
September 13, 2023FHA rehab loans are a specialized type of mortgage loan offered by the Federal Housing Administration that allows borrowers to finance both the purchase or refinance of a home and the cost of needed repairs.
September 8, 2023Borrowers considering an FHA loan should be familiar with some basic loan terminology. These loans are popular among first-time homebuyers and those with lower credit scores because they often offer more flexible eligibility requirements and lower down payment options.
September 2, 2023You may have heard the terms co-borrower and cosigner in connection with your FHA loan process, but aren't sure about the distinction. Both a co-borrower and a cosigner can help a primary borrower qualify for a mortgage, but they have different roles and responsibilities.
August 27, 2023The Federal Housing Administration has specific credit requirements and guidelines for borrowers looking to buy or refinance homes with an FHA loan. In addition to what FHA guidelines state, lenders may have more stringent requirements that may vary from one lender to another.
August 23, 2023Mortgage APR (Annual Percentage Rate) and a loan's interest rate are two different things, although they are closely related. Understanding the difference is an important part of a borrower's analysis of the true cost of their mortgage.
