If you’re like most people buying a home for sale in Lake City or a nearby community, you have to take out a mortgage loan – and if you have a mortgage loan, you’ll have to pay interest on it.
So how do you get the best possible interest rate?
Find out now.
How to Get the Best Interest Rate on Your Mortgage
A lot of factors come into play when a lender decides what interest rate you qualify for, including:
- Your credit score
- How much money you’re putting down
- The total loan amount
- How long your loan will last
- Whether you get a fixed-rate or adjustable-rate mortgage
The higher your credit score is, the better terms lenders are willing to offer you. That’s because you’re less of a risk with a high credit score – they’re pretty sure you’ll pay back your loan and interest.
When you make a substantial down payment, lenders feel like you’re in it with them. The higher your down payment is, the more likely you are to get better interest rates and terms on your loan.
Total Loan Amount
Your total loan amount has an impact on what kinds of rates the lender will charge you. That’s because lenders are assuming less risk with a smaller loan.
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Your Loan Term
In many cases, shorter loan terms (like 10-year or 15-year loans) have lower interest rates and lower overall costs. Just remember, they’ll be larger monthly payments, though – that might offset the benefits of a lower interest rate.
Fixed-Rate vs. Adjustable-Rate
When you have a fixed-rate mortgage, your interest rate stays the same for the entire life of your loan. With an adjustable-rate mortgage, or ARM, your interest rate stays the same for an introductory period of time (usually 5, 7 or 10 years) but then fluctuates annually to match what’s happening with current interest rates at the time. Usually, the initial interest rate on an ARM is lower than it would be on a fixed-rate mortgage, but it can go up significantly after your introductory period is over.
Are You Buying a Home for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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