Your mortgage rate is important. If you get a lower rate, you could save a significant amount of money over the life of your mortgage.
To calculate your monthly interest rate, take the overall interest rate and divide it by your payment period. Multiplying your principal by the monthly interest rate tells you your monthly interest cost.
However, depending on the type of mortgage you have, interest rates may change between terms. Plus, the ratio between interest and principal payments will shift over the life of the loan.
With this knowledge, you’re probably wondering how to get a better rate. Here is some helpful information on mortgage interest rates.
Mortgage Rates Can Vary by Credit Score
Several factors determine the interest rate you’re given. However, many mortgage rates today depend on your credit score. Your credit score tells lenders a lot about your credit history, and they’ll look at it before they decide to give you a loan.
The way most lenders see it (especially large financial institutions), is that those who have a good credit score are less risky than those who may have lower scores. For this reason, they’re often willing to give people in this position lower rates.
If you have poor credit or no credit, that can make it difficult to get a mortgage and, if you do get a mortgage, the rate you’re given may be quite high. For most traditional lenders, the better your credit score, the lower rate you’ll likely be given; the lower your score, the more you may be expected to pay.
The Credit Score You Need for the Best Mortgage Rate
Credit scores are three-digit numbers that represent the information in your credit report. Credit scores range between 300 and 900, with higher scores being better. In general, a credit score higher than 680 is considered good and a score of at least this amount is usually needed to get the best mortgage rates.
If your credit rate is lower than this amount, there are things you can do to improve your score. However, they all take time. There’s no way to instantly improve your credit score.
By paying your bills on time and focusing on reducing the amount of debt you have, you can improve your credit score. If you develop a history of paying your debts on time and not borrowing more than you can afford to repay, this will improve your credit score.
Another good thing is your credit score is not the only factor considered when you’re applying for a mortgage. All lenders are different and they each weigh factors differently.
Mortgage Rates Where Credit Score Matters Less
Large financial institutions typically focus on credit scores a great deal when they’re giving out loans. However, it’s often possible to obtain a loan from a private lender even if your credit score isn’t where you’d like it to be.
To find these lenders, it’s often best to work with a mortgage broker. Not only does a broker understand which lenders are likely to give you a good rate, but they take your overall situation into account, not just your credit score. That can help you get a mortgage that’s right for you.
Call Us Today
Wondering about current mortgage rates? Rather than just simply looking for a mortgage rate calculator, get real help by speaking with our team at Axiom Mortgage Solutions. We have more than 40 years of experience as mortgage professionals and can help you understand everything you need to know about getting a mortgage.
To speak with our team, call our Tecumseh, Ontario office at 519-735-1440 or our Leamington, Ontario office at 519-326-4978. Or reach us via our online contact form.