When you take out a mortgage, the bank as the lender takes a risk. The risks assumed by the lender are expressed in the form of interest rates, and the costs you must pay for obtaining the loan. The calculation of your mortgage interest rate depends on the amount of risk taken by your lender. The interest rate determined for your mortgage is the result of a borrower’s layered ‘risk factors’. In what follows we would like to provide a little bit of insight into some of these risks.
The most common factors are based on the borrower’s fico scores. The higher the scores, the less risk to the lender. Other considerations would be down payment amounts, the more you put down, the lower the risk, property types (condo’s vs. single family dwellings), loan sizes, and loan to values. Another major factor is the occupancy type. The lender feels that if a borrower owns a home that they do not live in, they are more likely to let the home foreclose in case of trouble, than if they actually lived in the property.
If you think you could use some expert help with the calculation of your mortgage rates or want to have a deeper understanding of the entire mortgage system, contact Maureen Martin. A mortgage originator with many years of experience, Maureen Martin can tell you everything you want and need to know about mortgage interest rates and she will also help you obtain the loan you need with the most favorable conditions possible.