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At Homesite Mortgage, we offer consumer-direct mortgage services. Whether you are purchasing or refinancing, our extensive experience and below-market rates make us the best choice for your mortgage needs.
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About Mortgage Interest Rates
Mortgage rates are the interest rates that are applied to your home loan. The basis of the interest rates are determined by various economic factors, but through working with the right lender, you can ensure that you’re receiving you the best available mortgage rate for your type of home loan.
What Affects My Individual Mortgage Rate?
Credit Scores and Mortgage Rates
Your credit score is one of the largest determining factors of the mortgage rate you’ll receive for your home loan. Your credit scores gives lenders a glimpse of how reliable you’ll be in making regular payments on your mortgage, because it reflects how you’ve made payments on previous debts. The higher your credit score, the lower your mortgage rate.
Get started by having your credit report pulled by a reputable source. Check for any inaccuracies and have resolved immediately. Once you have a solid idea of where your credit score falls, you’ll be able to have an accurate estimate of the kind of home that can fit into your budget.
Type of Home Loan
The type of loan you select will affect your mortgage rate. Conventional loans tend to offer the lowest mortgage rates (and don’t come with additional fees that accompany some government-backed loans) compared to FHA and USDA loans.
Additionally, fixed-rate mortgage and ARMs usually offer different mortgage rates. Fixed-rate mortgages may have higher interest, but if you know that you’ll be living in the house for a long period of time, having a locked-in mortgage rate is beneficial. However, if you think you may move before your ARM will re-adjust, that’s a great reason to go for the lower (and possibly shorter-term) interest rate.
Term of Home Loan
The length of your mortgage will have a big impact on the mortgage rates determined by your lender. Traditionally, shorter-term loans (15-year mortgage vs. 30-year) will offer lower mortgage rates—and therefore lower overall costs—but come with higher monthly mortgage payments.
Often times, it is possible to refinance your 30 year mortgage after 7 or 8 years down to a 15 year mortgage without any additional out of pocket expenses due to the amount saved by taking advantage of the lower interest rate with the shorter term. Check out our Guide to Cutting 10 Years Off Your Mortgage to learn more.
Why Homesite Mortgage for the best mortgage rates?
Mortgage rates fluctuate daily, and there are many unknowns as to when rates will skyrocket again. It’s a challenge to know when you are truly locking in the best mortgage rate for your home. Often the best solution, though, is to work with a trustworthy and knowledgeable lender.
Homesite Mortgage has many years of experience and much knowledge of the interest rate waves that come and go. We understand how the market affects your home loan mortgage rate and what factors you can control to avoid risks while accessing the lowest rate available.
Have questions about getting the best mortgage rate?
Mortgage Rates FAQs
Is the interest from my mortgage rate tax deductible?
The interest you are paying for on your home loan is frequently tax deductible (if it is your primary residence). Speak with a tax specialist to find out if you will be able to deduct the mortgage rate interest on next year’s tax return.
Who should pay closing costs?
Occasionally, the seller of the house may agree to paying for some or all of the closing costs in negotiations. If you have closing costs to cover though, the simplest option is to pay them out of pocket. You may have the ability to negotiate with your lender to have the closing costs lumped into your mortgage—that may result in a higher interest rate, but you wouldn’t have all of the upfront costs to cover at once.
What are mortgage points?
Mortgage points (also known as “discount points”) are opportunities for you to pay a one-time fee in order to receive a lower mortgage rate on your home loan. Each point is equivalent to 1% of your total loan amount—typically resulting in a mortgage rate that’s 1/8–1/4 of a percent lower than your originally quoted mortgage rate.
What is an interest-only loan?
An interest-only loan is a loan option where you will only pay interest for a predetermined amount of years before adding principal payments into your monthly mortgage cost. Interest-only loans are a popular option for those who expect to see a large spike in income in coming years. On the other hand, interest-only loans are often a much higher risk than traditional loans since the payment will increase noticeably once the principal part of the loan is added. Additionally, during the years of only paying interest, you will not be building any equity in your home. However, for the right situation and qualifying borrower, interest-only loans can be appealing options by offering flexibility in your monthly budget.
Should I opt for a fixed-rate or adjustable-rate mortgage?
Because the mortgage rates on fixed-rate loans don’t change over the life of the loan—regardless of economic shifts— they’re a secure option if you plan to stay in the home long term. With an adjustable-rate mortgage, you’re guaranteed to have the mortgage rate agreed upon for a set period of time, and then the interest rate will adjust based on the current mortgage rates.Because adjustable-rates are only fixed for a short period of time (five, seven, or ten years) and can adjust annually after the fixed rate period; their rates tend to be lower than fixed-rate mortgages. However, if you plan to sell your home prior to the interest rate re-adjusting, an ARM can offer you significant savings.