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
August 9, 2021Many first-time homebuyers need some help understanding and navigating the ins and outs of the mortgage process, and down payments are an essential part of that. A down payment is an upfront installment made on a large purchase while the remainder is paid off with a loan.
July 30, 2021The FHA Streamline Refinance allows mortgage holders to refinance their home loan without going through the process of second appraisal. Since this is a step that was completed with the first FHA mortgage, the FHA waives it for the refinance
July 14, 2021Making the decision to buy a house is a big one, followed by the choice of which house to buy. The next biggest decision you make is going to be the type of home loan you need to go through with the purchase. One option for financing your home is an FHA loan.
June 25, 2021Most first-time homebuyers decide on purchasing a home at least a year in advance, sometimes even a couple of years ahead of time. The earlier you make a decision to buy a home, the more time you have to save up for your down payment.
June 8, 2021While an FHA home loan is a good option for first-time homebuyers who don’t have enough money saved for a large down payment, it’s important to understand the ins and outs of the FHA guidelines, and what it takes to get approved as a borrower.
