If you've ever wondered what the main factors affecting the quoted interest rate for your new home, here is a list of the top five factors that can affect your interest rate for a new mortgage. Of course, each individual situation is different, but when you’re considering buying a home be sure to keep these in mind!
Credit Score: Your credit score is one of the most important factors that will determine your rate.
Property type: There can be pricing adjustments for condos and multi-family properties as opposed to a single-family purchase.
Loan to Value: This is your down payment for a purchase or your equity for a refinance. The lower your loan to value (LTV), the better your interest rate may be.
Rate and Term Refinance vs. Cash-Out Refinance: A Rate and Term Refinance has a loan amount that is enough to repay the balance of your existing mortgage. You may include all third party fees, taxes, insurance, and interest into the loan amount. A Cash-Out Refinance, on the other hand, has a loan amount that exceeds your current mortgage balance. There may be a onetime fee for a Cash-Out refinance, depending upon your loan to value.
Escrow Reserve: Paying your property taxes and homeowners insurance on your own, rather than having them included in your house payment may cost you an additional fee. Most lenders charge a one time fee for the impound waiver.