What Determines Your Interest Rate?

There are several things that will determine the interest rate you will qualify for.

A borrower with excellent credit with a history of making payments on time, is considered low risk. Therefore, qualifying for a lower interest rate. Pretty obvious, right? But there are other determining factors; a detached, single family home and the borrower being the primary resident a low risk factor.

If a borrower has poor credit with a history of late payments, he will be consider a high risk borrower to a lender resulting in a higher interest rate on a mortgage. Add a multi-unit dwelling, condominium, and vacation home or investment property and that won't help your situation.

Different loans also carry different rates.

Conventional mortgages, which are mortgages backed by Fannie Mae and Freddie Mac, often carry the highest mortgage rate as compared to other common loan types.

VA loans, which are loans guaranteed by the U.S. Department of Veterans Affairs, often carry the lowest rate. VA mortgage rates tend to be 37.5 basis points (0.375%) lower than a comparable conventional loan.

Loans insured by the FHA are also often lower. FHA mortgage rates tend to be 25 basis points (0.25%) lower than comparable conventional loans.

USDA loans, which are also known as rural housing loans, often carry mortgage rates between VA and FHA rates and allow for zero down payment.

Mortgages Unlimited is a local mortgage company serving not only the Twin Cities but also, South Dakota and Wisconsin. We work on the behalf of our clients ensuring they are getting the best possible loan while providing outstanding customer service.

Give one of our Mortgage Consultants a call @ 763-416-2600 if you are looking to purchase a home or refinance your existing home loan. Or you start a secure online application at www.muiapply.com