Four Things That Help Determine Your Mortgage Rate

Are you considering buying a home in the Richmond area?

Whether you are relocating to Richmond, looking to upsize or downsize from your current Richmond home, or thinking about hanging up your “renter” hat to finally become a Richmond home buyer, you will most likely need to consider interest rates and monthly payments.  Here are four things that help determine your mortgage rate.

Four Things That Help Determine Your Mortgage Rate | MyKCM

If you’re looking to buy a home, you probably want to secure the lowest interest rate possible for your home loan. Over the last couple of years, that was easier to do as the housing market saw record-low mortgage rates, but this year rates have risen dramatically.

If you’re looking for ways to combat today’s higher rates and lock in the lowest one you can, here are a few factors to focus on. Since approval opportunities can vary, connect with a trusted lender for customized advice.

Your Credit Score

Credit scores can play a big role in your mortgage rate. Freddie Mac explains:

When you build and maintain strong credit, mortgage lenders have greater confidence when qualifying you for a mortgage because they see that you’ve paid back your loans as agreed and used your credit wisely. Strong credit also means your lender is more apt to approve you for a mortgage that has more favorable terms and a lower interest rate.”

That’s why it’s important to maintain a good credit score. If you want to focus on improving your score, your trusted advisor can give you expert advice to help.

Your Loan Type

There are many types of loans, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:

There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”

When working with your real estate advisor, make sure you find out what’s available in your area and which types of loans you may qualify for.

Your Loan Term

Another factor to consider is the term of your loan. Just like with location and loan types, you have options. Freddie Mac says:

When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”

Depending on your situation, the length of your loan can also change your mortgage rate.

Your Down Payment

If you’re a current homeowner looking to sell and make a move, you can use the home equity you’ve built over time toward the down payment on your next home. The CFPB explains:

In general, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can comfortably put 20 percent or more down, do it—you’ll usually get a lower interest rate.”

To learn more, connect with a lender to find out the difference a higher down payment can make for your new mortgage.

Bottom Line

These are just few factors that can help determine your mortgage rate if you’re buying a home. The best thing you can do is have a team of professionals on your side. Connect with us and a trusted lender so you have the expert advice you need in each step of the process.

Why Buying a Richmond Home May Make More Sense Than Renting

If you are renting or thinking of renting a home or apartment in Richmond, VA, you need to read this.

In the last year alone, Richmond area rents rose a whopping 36% on average.  That’s the 8th highest of all markets in the country. Here’s why buying a Richmond home could be a sound financial move.

For those who think they have no choice but to rent because they can’t afford to buy, we promise that there are alternatives to high down-payments.  And even though mortgage rates are higher than you may be used to, they are still far below averages over the past several decades.  Keep in mind that rent is a 100% interest rate and you are building no equity at all.  If buying a Richmond home, experts anticipate that you will continue to build equity on that purchase and you can always refinance if rates go down in the future.

If you are already renting and have roommates, consider buying and becoming a landlord yourself!  Rent those extra bedrooms out to friends and they can help you pay down that mortgage.

Check out this fantastic infographic.  It really puts all the numbers in perspective.  We’d love to help you run your own numbers to put your life-changing move into motion!

Why Buying a Home May Make More Sense Than Renting [INFOGRAPHIC] | MyKCM

Some Highlights

  • If you’re trying to decide whether to rent or buy a home, consider the advantages homeownership offers.
  • Buying a home can help you escape the cycle of rising rents, it’s a powerful wealth-building tool, and it’s typically considered a good hedge against inflation.
  • If you’re ready to take advantage of the benefits of homeownership, let’s connect to explore your options.