Countless factors go into determining your mortgage rate for your new home — from market fluctuations to individual terms of your mortgage application. It can be confusing to determine exactly what your mortgage rate will be.
But when you work with the best mortgage lenders in West Chester at Penn Street Mortgage, we’ll provide you with the knowledge and information you need to make a well-informed financial decision for your home purchase. You’ll know exactly how the interest rate you get for your mortgage will impact your monthly payment. If you’re tired of searching for “mortgage advice west chester,” let our team of trusted mortgage brokers guide you through the process.
But let’s dive into the different factors that impact mortgage rates, so you have a clear understanding of how you can get the best interest rate available.
How are Mortgage Rates Determined?
Mortgage rates are essentially the cost you pay to borrow money to purchase your home. These rates can fluctuate daily based on a range of economic factors and your personal financial situation.
While some rates are outside of your control — like market fluctuations or macroeconomic factors — there are some things that you can do to get the lowest rate possible.
Here are some different factors that have an effect on your mortgage rate:
Inflation
A silent but significant player, inflation affects the purchasing power of money, which in turn influences the mortgage interest rates. Lenders adjust rates to ensure the return on the loans they provide retains its value despite inflationary pressures.
The Bond Market
Interest rates on mortgages can be affected by something called government securities. These are investments that people make in the government, and when their interest rates go up, the interest rates on mortgages usually go up too. This is because lenders need to make sure they can still compete with other financial companies.
So, if you’re thinking about getting a mortgage, keep an eye on what’s happening with government securities.
The Health of the Economy
Economic indicators like how much the country’s economy is growing, how many people are getting jobs, and how much people are spending on things can affect how much it costs to borrow money to buy a house. When the economy is doing well, people have more money and they can borrow more, so the cost of borrowing money goes up. But when things are not going so well, people have less money and they borrow less, so the cost of borrowing money goes down.
Your Financial Standing
Your mortgage rate depends on a lot of things — not just the general state of the economy. Your personal financial information like your credit score, the amount of money you put down, the type of mortgage you choose, and how long you’ll have the loan all play a big part in determining your rate. If you have a good credit score and can make a big down payment, you’ll likely get a lower rate because lenders will see you as less of a risk.
How to get the best mortgage rate in West Chester
When shopping for a mortgage, you want to get the best mortgage rate your lender offers. There are a few things you can do to improve your chances of getting the best mortgage rate.
- Improve your credit score: Having a good credit history can help you convince lenders that you are trustworthy and responsible in making your payments on time. This could lead to getting better loan terms.
- Make a larger down payment: The bigger the down payment amount you can offer, the more equity you have in your home to start. This makes it less risky for the lender and can help you lower your rate in the mortgage process. You can use our mortgage calculator to see for yourself how a larger down payment will impact your loan amount.
- Work with the best mortgage lenders: Who you work with matters when it’s time to make your next real estate purchase. Our team at Penn Street Mortgage is committed to finding you the best interest rate while providing unparalleled customer service. Contact us to learn how we can help you save money on your next home loan.
The different types of loan programs
Fixed-Rate Loan
A fixed-rate mortgage is a type of conventional loan that keeps your interest rate the same for the life of the loan. The most common is the 30-year mortgage, which means your monthly principal and interest payments remain unchanged during the entire 30 years of the loan. This type of loan program is great for buyers who plan on making their new house a long-term home and prefer the stability of knowing exactly what their payments will be each month.
Adjustable-Rate Mortgages (ARMs)
Another type of conventional loan is an adjustable-rate mortgage (ARM). With this type of mortgage, your interest rate remains fixed for a certain period, and then it can change periodically based on market trends. This type of mortgage may be a good option for those who plan to move or refinance before the rate changes or for those who expect their income to increase in the future.
Government-Backed Loans
This category includes Federal Housing Administration (FHA) loans, Department of Veteran Affairs (VA) loans, and USDA loans, which are insured by the federal government. Each type is designed to serve different types of qualified homebuyers but can have a lot of benefits like no down payment requirement and no private mortgage insurance.
Jumbo Loans
For properties exceeding the federal loan limits set by Fannie Mae and Freddie Mac, jumbo loans come into play. These loans are for buyers who are purchasing high-value properties, but they often require stronger credit scores, larger down payments, and more detailed financial statements.
Let Penn Street Mortgage Guide You Through the Mortgage Process in West Chester, PA
Our team of trusted mortgage advisors is here to help answer your questions and guide you through every step of the mortgage process. With decades of experience, we’re dedicated to providing the best experience for our clients. We’re confident that we can help you find a mortgage rate that works for you and your financial goals.
Whether you’re a first-time homebuyer or a seasoned real estate investor, give us a call to learn how we can get you the best interest rate on your next property purchase. We’re here to help!
