Who determines the interest rate to charge for each mortgage? Mortgage interest rates are determined by lenders based on three criteria, 1. The size of the loan. 2. The risk associated with the loan. 3. The current government interest rates.
The size of the loan – Mortgage loans could either be conforming or jumbo loans. Jumbo loans are considered loans over 417,000 in all states except Alaska and Hawaii in which jumbo amounts are loans over 625,000.
Risk associated with the loan – The risk of a loan depends upon the credit history and the financial stability of the home buyer. Work history comes into play if you are an employee or are you self employed. The more secure your financial stability is with a high credit score, the lower the interest rate you will receive.
Current Interest rates – The United States Government will set various interest rates. Mortgage interest rates are based on economic factors.
If you are ready for the home buying process, the first step is to get pre-approved. Click here to start the pre-approval process.
