New York Mortgage Lenders: How is My Interest Rate Determined?
Interest rates are of concern to most home buyers because they directly impact the amount of the monthly mortgage payment. Interest rates are determined by New York mortgage lenders by a variety of factors. These factors include:
- Stock market
- Debt to income ratio
- Loan to value
- Credit scores
While you may not be able to impact the stock market to reduce the interest rate offered to you on your next home purchase, you can better understand other factors relating to your interest rate in order to get the best rate possible.
Debt to Income Ratio
A portion of your interest rate is determined by the amount of risk you offer as perceived by the bank. The more debt you owe in comparison to your income, the more of a risk the bank will perceive you to be. Therefore, your interest rate will typically be higher. You can increase your chances of obtaining a lower interest rate by working on paying down your debt before applying for a home loan.
Loan to Value
California mortgage lenders are also usually concerned with the amount of risk they are taking on in lending you money for a home purchase. The more money they finance for you, the more of a risk they will see themselves as taking on. More risk equals a higher interest rate in many cases. When possible, try to make a higher down payment to lower the loan to value and your interest rate in the process.
The higher your credit score, the better interest rate you will qualify for. Work on cleaning up your credit score ahead of time to get the best rate possible. Be sure to review your credit report to be sure there are no errors are inaccuracies. If you see something reported inaccurate, in many cases, you can have it removed by providing backup documentation and writing the credit reporting bureau.
Now that you understand how rates are determined by New York mortgage lenders, it’s time to start shopping around for a variety of lenders to find the best deal possible. MortgagLenders.org can help you get started by connecting you with multiple lenders to choose from.