What Affects Your Interest Rate for a home loan in Kentucky?
There are really four key factors that will influence rates on your mortgage loan in Kentucky:
The market, your financial situation, the type of Kentucky Mortgage loan (FHA, VA, USDA Conventional), and the loan structure.
The Market for Kentucky Mortgage Rates
Mortgage Backed Security prices directly impact interest rates. Mortgage backed securities or mortgage
bonds are a market just like the stock market. So, when economic news affects these mortgage bond
prices, home loan rates are directly influenced. One of the biggest influencers of this market is
inflation. Inflation or even expectations of inflation will negatively impact mortgage bond prices and
ultimately increase rates on your home loan in Kentucky
Financial Situation For Your Kentucky Mortgage Rate
Income –
Your income gives you the ability to make
your monthly mortgage payments. Generally,
lenders require applicants to have a two-year stable
employment history. Applicants who have been at
their job for a shorter period of time should be in the
same field.
Savings –
Your savings enable you to pay for the
upfront costs associated with purchasing a home.
These include the down payment, closing costs and
cash reserves.
Debts –
The amount of debt you have will impact your
debt to income ratio. Debt payments consist of car
payments, student loans, alimony, required payments
on installment loans and required payments on credit
cards. They do not include rent, utility bills, mortgage
payments for loans being paid off, or payments on
credit card balances that you pay in full at the end of
the month. Lenders look at debt to income ratios to
determine how much home you can buy.
Credit and Credit Score
– If you want to be eligible for
the best mortgage rates, you will need to maintain a
credit score of 760 and above middle score of the
Mortgage Fico Scores lenders pull through Equifax, Experian and Transunion
Not only will this excellent
score motivate the lender to lower your rates to get
you as a customer, you will have more choices about
which mortgages are available to you. Your overall
payment history on the debts you have can also impact
your ability to qualify for certain types of loans, which
can affect your interest rate.
Type of Kentucky Mortgage Loan & Loan Structure
Loan Type
– The type of loan will impact the rate
you can expect. There are many types of loans Kentucky Mortgage Loans.
Conventional, FHA, VA, USDA, and Jumbo loans
can all have different rates.
Occupancy
– The best mortgage rates are
typically offered if you are purchasing a property
that is intended to be occupied as your primary
residence. Rates for second homes and investment
properties are typically higher.
Duration
– The duration of the loan can affect
mortgage rates. A shorter loan period will usually
equate to a lower mortgage rate and a longer loan
will typically have higher rates.
Down Payment –
A larger down payment can
impact interest rates. Putting more down will
decrease the risk for a lender and can improve
your interest rate. If you put less than twenty
percent down, certain types of loans require
mortgage insurance and this can also impact the
interest rates available.
Discount Points –
In order to get a lower rate
some clients choose to pay discount points.
Basically, discount points are percentages of the
loan amount paid in cash at closing in order to
lower a rate.
Lock Term –
The length of time you need to lock
in your rate can impact your rate. Typically, longer
term rates are more expensive.
Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Text/call: 502-905-3708
