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Home Financing Library

Several Factors Affect Your Mortgage Rate

The amount of your loan can increase your interest rate if the amount financed exceeds the conforming loan limits established by investors. The conforming loan limit may be revised at the beginning of each year.

Shorter loans, such as 20 year or 15 year notes, can save you thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower interest rate than a fixed rate mortgage, but your payments could get higher when the introductory interest rate expires.

A larger down payment “greater than 20% "will give you the best possible rate. Down payments of 5% or less should expect to will most likely have a higher rate as you are starting with less equity as collateral. If you've got the cash now and want to lower your payments, you can pay on your loan to lower your mortgage rate. Credit quality and debt-to-income-ratio also affect the terms of your loan through your credit score.