Summary: There are many different factors that determine mortgage interest rates in the State of Washington. In this article, 7 of these factors are identified and discussed. This article also encourages our readership to reach out to Sammamish Mortgage, a Pacific Northwest mortgage company, to learn more about this subject.
When someone is interested in buying a home, there are a number of factors that people need to consider. Some of these include the budget, the size of the home, and the mortgage interest rates.
The mortgage rate is going to play a tremendous role in whether or not someone is going to be able to afford their dream home. For this reason, it is critical for everyone to know how mortgage rates are determined. There is a number of factors in someone’s financial history that are going to impact the mortgage rate the lender offers. What’s more, there are some factors which are outside the control of the borrower.
In this post, we discuss the 7 factors which determine mortgage interest rates in the State of Washington. As most prospective buyers in WA State are aware, many markets in WA State have relatively high median home values. This means that even slight differences in mortgage interest rates can have a big impact on a buyer’s overall financial obligation.
- Credit Score
- Down Payment
- Home Location
- Term of the Loan
- Type of the Loan
- Employment History
- Current Financial Market
The Credit Score
One of the most important factors that a lender is going to consider is someone’s credit score. A credit score is a reflection of someone’s risk to the lender. The higher the credit score, the more likely the loan is going to be repaid, in the eyes of the lender.
If someone’s credit score is too low, the lender might not make an offer at all. In order to reduce the interest on someone’s mortgage, it is important to correct any inaccuracies on the credit report ahead of time. This will make someone more competitive when applying for a mortgage.
The Down Payment
Another factor that plays a role in determining mortgage interest rates in WA State is the size of your down payment. As a general rule, the greater your down payment, the higher the chance you’ll receive a lower rate. In most cases, lenders will want to see at least some type of down payment, although zero down payment loans do happen. If you don’t put down at least 20% on a home, most lenders will typically require you to obtain private mortgage insurance as a precaution.
Home Location
Your interest rates depend in part on the state you’re looking to buy in. So, for WA State buyers, you’ll receive a rate which reflects the fact that you’re seeking to buy in WA State as opposed to California or Nevada. When you apply for a mortgage loan, you’ll input multiple pieces of data related to the location of your desired property. You’ll input the state, city, county, and so forth. The lender will use this information in the determination of your interest rate.
Term Of The Loan
Another factor that contributes to your mortgage interest rate in Washington State is the term of your loan. Mortgage loans can be paid according to different repayment schedules. For instance, there are 30 year loans, 20 year loans, 15 year loans, and so forth. As a general rule, the shorter the term of your loan, the lower your interest rate will be. However, even though shorter terms carry lower interest rates, they also carry higher monthly payments because the loan is paid off quicker. This is the tradeoff of receiving the lower rate.
Type Of The Loan
There are several different types of mortgage loans, such as VA loans, FHA loans, conventional loans, and so forth. Your interest rate can vary depending on which type of loan you receive. Some of these loans typically carry lower interest rates than others. For instance, VA loans typically have lower rates, but this is because those loans are reserved for veterans. Prospective borrowers need to check to see the eligibility requirements for each of these loans and determine which loan they should apply for.
Related: Mortgage Loan Program Infographic
The Employment History
The lender’s biggest concern is making sure their loan is repaid. In order to make mortgage payments on time, the borrower needs to have a steady stream of money coming in. This means maintaining a steady job.
In order to predict this, the lender is going to look at someone’s employment history. The longer someone has been employed, and the fewer gaps someone has in their employment history, the lower the interest rate on the mortgage is going to be.
The Current Financial Market
Some of the factors involved in a mortgage rate are outside of the borrower’s control. Mortgage rates are also impacted by the current financial market. Like the stock market itself, mortgage rates are going to rise and fall with the real estate market. It is important for everyone to think about the current financial market when applying for a mortgage.
Thinking About Mortgage Rates
These factors will play a role in the mortgage rate someone is going to be offered. Everyone should think about the interest rate on a mortgage when looking for a home. As mentioned, interest rates may be especially important for buyers in WA State because so many local markets in WA have high median home prices. Higher interest rates can translate into unmanageable financial obligations. Take the steps to minimize your rate and reduce your monthly payment.
Talk about your personal financial situation with your trusted home finance professional. They are a valuable and experienced resource that can answer all of your questions regarding the best fit for your mortgage.
Contact Sammamish Mortgage for More Counsel
These are just 7 of the many factors which influence interest rates in Washington State. There are others as well. If you’re thinking about entering the market and would like more information on this topic, reach out to Sammamish Mortgage today. Sammamish Mortgage has a team of mortgage professionals who are well-versed in the subject of mortgage interest rates. Our experts can give you guidance on how to maximize your situation and minimize your interest rate. Contact us today to learn more, and visit our site to View Rates to see current mortgage rates. Also, you can get an instate Rate Quote today, or even Apply Now using our automated online application system.
