It’s not just a guessing game. Mortgage rates are calculated by a particular formula and customized specifically for you.

So the big question is: what can you do to get a lower rate?

A major part of the rate is determined by how “risky” the loan is. Risk to a financial institution means how likely you are to fall back on or stop making payments.

Two women looking over financials

What factors are considered in this risk?

  • Your credit score. When your score is higher, your rate will be better.
  • How much money you’ll be putting down. The size of your loan compared to the value of the property you’re purchasing is called the Loan-To-Value ratio. If an LTV is 80% or more, that’s considered high.

“But there are other pieces to the puzzle that you can’t control,” says Gregg Formigoni, senior vice president, mortgage lending at INB. “Current market rates are usually dictated by the current economy – inflation, the job market and other indicators.”

As we saw during the COVID pandemic starting in 2020, interest rates tend to decrease when the economy declines and unemployment goes up so that it’s more affordable for borrowers to get loans.

Your rate is also affected by what kind of loan you get. Typically, traditional 15-year mortgages are eligible for a lower interest rate than a 30-year loan. And other kinds of mortgage loans will have different rates.

“Property type and purpose play a factor as well. We need to know if this will be your personal residence, a second home or investment property,” Gregg says.

While you can control some pieces of your mortgage rate and not others, the best step you can take is to meet with a lender who gets to know your situation.

“Many lenders will quote a mortgage rate without asking the right questions, often stating a rate that doesn’t apply to you,” Gregg says. “At INB, we take the time to understand your specific situation, so we can provide an accurate quote specifically for you.”

Mortgage rates can vary even from day to day. (Hint: be sure to “lock in” a rate that you want, because it can change quickly!) So, the only way to know exactly what your payment and interest rate might be is to sit down with us and calculate all of the numbers.

“INB is a local bank with experienced lenders, offering a wide variety of loan programs –including conventional fixed rate, FHA, VA, and Guaranteed Rural Housing to name a few. Because we’re local, we also know about the best homebuyer grant programs which may be available to assist you,” Gregg shares. “And if you have any questions after you purchase your home, we will be here ready to help!”

Come see an INB mortgage lender today!