Are you preparing to own a home of your own?
The mortgage Interest Rate is really important if you are considering getting a loan. The mortgage interest rate is the percentage of the loan money that you are going to pay your lender. This is important and many factors affect it.
The good news is you can influence your mortgage interest rate, either reduce or increase it. This page will answer your questions and as well show you how to get a good mortgage interest rate.
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is 4.125 a Good Mortgage Interest Rate?
There’s no straight answer to this question, 4.125 interest rate is a good mortgage interest rate but well it depends on the type of interest rate involved and the period of years given for payment. There are factors to check, which will certain if 4.125 is a Good Mortgage Interest Rate. A mortgage interest rate around or below 4 is great and should be considered.
Stay with me on this page, I will take you on a long ride on what you should know about good mortgage interest rates.
Here is Quick Example, we’ll look into
“Have a loan of $230K and it will be for 30 years fixed conventional loan. Sales price is at $246K, i’ll enjoy the equity of 13% of this, which aid to reduce my loan to $230K. I’ve a good credit score 800+, but my broker is offering me conventional loan of 4.125 Mortgage Interest Rate, is the Mortgage Interest Rate good?” – Tamianles
This is the question that Tamianles asked in our Facebook discussion group that triggered me to write this article.
Tamianles made her question more detailed and in this situation, a 4.125 Mortgage Interest Rate is very good, if you don’t qualify for best execution. I worked with Mortgage companies for years and offers below or range of 4% are good.
There’s a better way to get a good mortgage interest rate, this is the method I shared with Tamianle. This method is shopping for offers and comparing which suits you best. Comparing different mortgage interest rates and the conditions that come with it will result in making the best choice.
How Can You Choose The Best Mortgage Interest Rate?
4.125 is a good Mortgage Interest Rate, but not in every financial situation, below are key takeaways to choosing the best Mortgage interest rate.
Key Takeaways To Get Good Mortgage Interest Rate
- Build Your Credit score.
- Save for a down payment.
- Consider the Best loan for you.
- Loan shopping.
These factors above affect your Mortgage Interest Rate and the good news is, that you can work on them to get Good Mortgage Interest Rate better than 4.125.
Down this page, I took my time to discuss how these four factors can help you get a better rate. I talked with Morse and Milauskas, Both are loan officers at first home Mortgage in Millersville, Maryland. They shared their knowledge which is a major constituent of this article.
Read on ??
How To Get Great Mortgage Rate
Work On Your Credit Score (Build Your Credit Score)
This is the first thing that you need to do. Build your credit score, awesome and good credit score tends to get better mortgage interest rate compared to bad or poor credit score. The interest rate that you’re given by a lender is often influenced by your credit. During our conversation, Morse and Milauskas made it clear, why you need to work on your credit score.
Few 100s in your credit score can help reduce your interest rate by 0.5, 1, or more. That’s amazing, and the reason you need to build your credit score before applying for a mortgage. To check your credit score, CLICK HERE.
How To Increase Your Credit Score
What helps to increase your credit score is the rate and time you pay off your previous debt. Lenders are always interested in your loan history and income inflow. So if you missed paying off your loan or credit cards on time, focus on paying your bills on time this year.
Paying your small loans off before or on time is a huge boost. Focus on your small debt and pay them off, this will help to increase your credit score and enhances your chances of getting a better mortgage interest rate. There’s no overnight success in building your credit score. Watch the video below to learn more about how you can boost your credit score.
You can apply the snow debt strategy – Where you pay off your small debt and focus on part-payment of the bigger debt. Meeting your monthly payment as scheduled will go a long way to boost your credit score.
Below is a table that shows how your credit score can affect the mortgage interest rate
| Credit Score Range |
30 – Yr Mortgage APR* |
| 760-850 | 5.304% |
| 700-759 | 5.526% |
| 680-699 | 5.703% |
| 660-679 | 5.917% |
| 640-659 | 6.347% |
| 620-639 | 6.893% |
The figures are based on the national average and are subject to change based on other factors that can affect the mortgage rate. The mortgage interest rate in the table above might be less (high chance).
Save For Down Payment
This is another major factor that will help you get a good mortgage interest rate better than 4.125. Save money in time to cover the down payment of the mortgage loan. Most lenders offer a down payment of less than 20 percent which is backed by FHA, which results in a down payment as low as 3.5 percent.
This is regarded risky by lenders and will lead to higher mortgage interest rates. It will as well attract paying PMI (Private Mortgage Insurance) which protects the interest of the lender. This happens because they doubt your power to pay off the mortgage.
Saving up for a down payment and having a down payment above 20 percent or above increases your chances of getting a better mortgage interest rate below 4. This will as well reduce costs because your lender will not be afraid of you not paying off. Therefore, no need for a private mortgage insurance company.
I know it is not easy to have 20 percent of your property worth, but you need to plan yourself and not be caught up in a financial mess. Before applying for a mortgage, I always tell people to consider their whole financial situation.
Don’t rush to drop or pay huge down payments without considering your overall financial strength. Morse and Milauskas Advice that this is something you should plan and save up gradually for it. Setting aside a few bucks a month can help in this situation.
If the 20 percent or more is going to take a lot of your assets or set you financially weak. Please don’t try it because you might be working into a financial disaster. Save up gradually, build a good credit score and then apply for a mortgage. The best interest rate is always waiting for you.
Consider Or Choose The Best Loan For Yourself
This is where you need your loan officer to help you out. There are different types of loans and as well interest rates you can choose from.
There’s
- Conventional Loan – I prefer to call this a personal loan because it is not insured by the government. The Government agency doesn’t offer any guarantee, the loan is on your credibility.
- Government Insured Loan – This loan type is insured by the government agency, this loan is always backed by agencies like the Veterans Administration (VA) or Federal Housing Administration (FHA).
A conventional loan is best for people with good credit scores and a big down payment. Whereas, people with small down payments and poor credit scores can qualify for government-insured loans. I recommend you have a chat with your account manager, who will guide you on the best loan type to choose.
Another part of choosing the best loan is considering the interest options. The fixed-rate loan gives or locks your interest on the mortgage for the period given (10 to 30 years). While adjustable-rate loan locks the rate for only 5 or 7, or 10 years and gives room for the rate to be altered either to increase or reduce.
Here, you need your loan officer, he or she will go through your account and give you the best advice on what to do. Choosing the best loan option is a huge factor that can save you from paying thousands of dollars.
Loan Shopping
This is a personal term I use often, Morse and Milauskas laughed at me when I mentioned that in our conversation.
Many people don’t consider this when it comes to having a good mortgage interest rate. You might figure other things out but miss this, which will make you pay thousands of dollars more.
Loan shopping as the name implies, you shop for loans. Here, you check out different lenders for your mortgage. You’ve to do it wisely, if done in the wrong way can mess up your credit score (temporary). You can’t afford to have a different mortgage company assess your credit score, because inquiries will be made.
To beat this, apply to the mortgage company within a limited time. Limit your loan shopping to a period of 45-day window. Access to your credit score within that period will be considered as one.
The effect of different mortgage companies accessing your credit score is only temporary. Look for a lender that doesn’t charge or charges less fee on application.
Now you’ve access to different lenders, you can company what they’re offering you and know the one to choose.
LEARN: How do Mortgage Brokers Rip You Off? (Experience Shared)
Final Key Note
- Make sure you consider your options and the mortgage that suits you. Your loan officer will guide you through this process.
- Improve your credit score before you apply for a mortgage.
- Save up and have a big down payment. The bigger or higher your down payment your best chance of getting a better mortgage interest rate.
- Apply the snow debt strategy, and reduce your debt loan before you apply.
- Be bold to negotiate your mortgage interest rate, and ask for a better interest rate.
- Compare and consider different lenders, and check what they have to offer you.
- Buy discount points if you can afford them. This will give you a chance of reducing your interest rate.
- Pay close attention to APR
- Consider your overall financial situation, don’t go above your financial strength. Plan and execute the process; don’t rush.
4.125 is a Good Mortgage Interest, but many factors come into play. Before you conclude, take note of the points above and don’t make your decision in a hurry.
Build a good credit score, save for a down payment, and apply a loan shopping strategy to get the best mortgage interest rate.
Video Guide ??
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SOURCE:
Fannie Mae and Freddie Mac Purchases of Adjustable-Rate Mortgages
U.S. Department of Housing and Urban Development
Mortgage Market Survey Archive
Consumer Financial Protection Bureau. “What Is Private Mortgage Insurance”