Whether you already have a mortgage or you are trying to get one for a new home, there are many things you should be aware of regarding them.
The most important thing to remember is that there are so many things that can change the rate of your mortgage.
You should be aware of some of these things, so you will be as informed as can be when it comes to finding the perfect San Diego mortgage for you.
Here's a quick rundown of our list:
- Where Your Home Is
- Money Down
- Loan Amount
- When the Loan was Approved
- Term of Loan
- Type of Interest Rate
- Credit Score
- Type of Dwelling
- Economic Outlook
Where Your Home Is
Depending on the neighborhood your house is in, the rate will likely be different from other places.
This is due to laws in the district or state, and the lenders that are available in that vicinity.
It may also depend on the way the housing market is doing in a particular city or neighborhood.
For example, if there have been a lot of foreclosures and things like that in a certain place, the rates could be higher
than in other areas.
The amount of money you can put down for a down payment greatly affects the rate of your mortgage as well.
Experts suggest putting down as much money as you can, so try your best to save up for a while before you purchase a home.
If you can’t put a large amount down, you should do some calculations and see how your rate changes with a lower down payment.
This can not only tell you why you should try to make a larger payment, but can also let you know the exact amount you should be prepared to come up with beforehand.
Don't miss reading up on all the great San Diego down payment assistance programs currently available.
While it seems obvious, you should understand that the amount of your loan will change your mortgage rate.
Usually if you are looking for a jumbo loan or even something modest like a small home loan, you will have a higher rate than other loans.
This really has to do with the neighborhoods these houses are in and how often the loans go unpaid, as well as other factors, and not so much the actual dollar amount of the loan.
When the Loan was Approved
Rates can actually change from hour to hour, so the time your mortgage was approved can be different depending on that.
In this case, there is no way to tell when the proper time to get approved would be, nor do you have much control over it.
However, it is something to be aware of, just in case you need to know about it.
It helps to stay on top of the housing forecast in your area, in order to be the most prepared.
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Term of Loan
The term or how long you have the loan is also a big factor.
Some loans are for 15 years and others are for 30 years.
If you opt for the longer loan term, then you will be paying a lot more in the long run, due to the higher interest rate.
This should make sense to you if you have ever bought a car or had a student loan.
On the flip side, no matter what the term is, you should have an incentive to pay it back as quickly as possible, so you aren’t paying a lot more than you should.
Here's a thought - what if you got a 30 year fixed mortgage for lower payments - then, made payments every 2 weeks versus once a month.
Following this strategy will knock many years, and a lot of interest, off your mortgage loan.
Type of Interest Rate
There are two types of interest rates when it comes to loans.
One type is fixed for the life of the loan, which means your interest rate will never change.
This is a good thing if it is low, but bad if it is high, since you can’t get it altered at all.
The other type is adjustable.
Adjustable rates stay the same for a while, and will change from time to time.
It can go up or down, so don’t count on it always being lower.
Do your own research regarding interest rates, so you can be aware of how both types work and what their pros and cons are.
Make sure you read our article on fixed versus adjustable and see which might be better for you.
It should come as no surprise that your credit score is a major factor in your mortgage.
For one thing, it can keep you from qualifying in the first place.
The better your credit score, the more likely that your rate will be lower.
If your credit is fair or low, you may have to pay higher rates.
Do what you can to keep your score as high as possible, so you don’t mess up any future purchases you want to make.
We wrote a revealing article on how your credit score affects your mortgage rate (and terms).
Type of Dwelling
The type of house you want will affect your rate as well, since there are so many different types of dwellings you have to choose from.
When you have determined what type of house you want, you may not see much difference in the rates, but if you are choosing between something like a house and a condo, you will likely see a variation.
You can start your San Diego MLS search and find out what works best for you.
Of course the economy plays a large role in determining rates regarding all types of loans.
This means you should be aware of what the housing market is like before you decide whether or not to buy a house, as well as where to purchase one.
In San Diego, the housing market is healthy, so there are a lot of options out there to choose from.
A great resource we offer are our San Diego Market Reports.
It's like having your own personal CMA at your fingertips for any neighborhood in San Diego - and, you can find out what's active, pending, and sold for up to 3 full years.
There are a great number of factors that can affect your mortgage rate.
That’s why it is a great idea to get all your facts together beforehand and also be aware of your financial situation, credit score, and all the other information you’ll need before you attempt to get a mortgage.
It’s also quite beneficial to ask people that are experienced in this type of thing to help you out.
They will have answers to all the questions you have and should be able to point you in the right direction.
What do you think?
What are some other factors not mention that affect your mortgage rate?
Leave me a comment below - or, call/text me at (760) 297-4539.
Your Mortgage Rate Insider,
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