Secrets to the Lowest Mortgage Rates in Houston Unlocked: Learn about the Factors
Did you know mortgage rates have a long-term impact on a person’s financial health? Everyone seeks the lowest rate ever existed, but it is not easy to stumble upon one. There are a few factors that decide how high or low-interest rates should be.
So, for the lowest mortgage rates in Houston, you should keep an eye on these factors. Just when things are in favor, grab the best rates straight away. Make sure not to invest in the home loans which are too good to be true. For more information, take a look below.
The Loan Type
Have you decided whether it is going to be a fixed-rate or adjustable-rate mortgage? First-time homebuyers show more interest in the fixed-rate mortgage because the interest rate does not change with time. Therefore, the monthly payment does not change, either. On the contrary, the interest rate for the adjustable-rate mortgage changes with time. The mortgage has a fixed interest rate only during the beginning period (which spans between 5 and 10 years). After completing the initial period, the rate fluctuates depending on the index or market rate. This one is also attractive to moderate- or low-income families because the fixed-rate is low at the beginning. Even the rate is lower than a fixed-rate home loan borrower pays over the entire loan term.
The Economic Growth
Gross domestic product or the economic growth indicator acts as an influence on the mortgage rate. When economic growth is high, people can afford to buy more homes. Due to the high-rate home purchases, the mortgage rates also go up. However, poor economic growth leads to low mortgage rates. The opposite effect of the high economic growth undoubtedly weakens the economy. Wages decline and unemployment increases, such a fiasco leads to one of the lowest interest rates.
The Borrower’s Credit Score
A credit score is one of the crucial factors regulating high or low-interest rates for you. Putting it in simple words, borrowers with high credit scores can obtain low-interest rates. This means the borrowers with bad or damaged credit will have to pay for high-interest rates. Depending on the credit report, the lender calculates the interest rate. Through the credit report, the lender can receive information regarding your credit cards, payment history, and other loans. Before jumping into the purchase section, you should check your credit and review the report. By improving the credit scores, you can bag a low-interest rate easily.
The Housing Market Conditions
In the housing market, the conditions and trends leave a huge impact on mortgage rates. When the rate of building new homes or offering for resale is low, the interest rate goes down. It is done to increase the demand for home loans as well. This has been done for many years as FHA loans appeared during the Great Depression. The loan program was introduced to boost the market.
Not only the factors but the combinations together fix your interest rates. Everyone is in a different situation, so talk to your lender for further help.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.