If you have decided on buying your own home, this is great news! Keep in mind when purchasing a home, Florida mortgage lenders determine your interest rate based on specific information that you list on your application. There are certain factors that a lender analyzes before determining this rate including.
Factors That A Lender Analyzes
- debt-to-income or DTI ratio
- loan-to-value or LTV ratio
- type of property
- your credit scores
- your down payment
In addition to these, there are certain factors that determine your mortgage rate:
- Government intervention – when it comes to determining mortgage rates, the Federal Government plays a significant role in establishing the prime rate each quarter based on the performance of the US economy. For example, they may decide to lower the prime rate if they feel that stimulating growth is necessary.
- Inflation – the government defines “inflation” as an increase in the overall price levels of consumer goods and services. Inflation is closely monitored by the Federal Reserve. As a result, this has an impact on interest rates. When inflation increases, mortgage rates also increase. As a result, lenders charge higher loan rates to offset rising costs – especially where mortgage rates are concerned.
- Job Growth – another key factor that is closely monitored by the Federal Reserve is job growth. When jobs are plentiful, borrowers tend to pay back their mortgages on time. The Federal Reserve may decide to lower mortgage rates based on employment growth estimates. On the other hand, when the unemployment rate rises, they may raise those rates in order to boost investing and spending.
- The Economy – one of the primary factors that help to determine whether the interest rate will increase or decrease are changes in the economy. Mortgage rates typically decrease when the economy is robust and stable. Conversely, those rates will increase when the economy is struggling.
- The Federal Reserve – because they are responsible for setting interest rates for all financial institutions, the Federal Reserve directly influences those rates. When they decrease or increase mortgage rates, so do lenders, thereby passing these changes onto their clients.
- Additional factors – there are other factors that often play a role in establishing interest rates such as consumer trends and demand for mortgage loans. When the demand for homes increases, it can positively impact the interest rate since more individuals can afford to buy them.
Buy A Home in Fort Lauderdale Florida
If you’re shopping for a home loan or trying to calculate the amount you can afford, Florida State Mortgage Group, Inc. is here for you! Our experts are available to assist you with the mortgage requirements after evaluating your specifics. To schedule an appointment or to know more about our services, call us today at (954) 359-3000!