There are many factors that go into determining your mortgage interest rate when you purchase a home, some of which are the following:
Down Payment Amount
Post Closing Money Reserves
Additionally, the type of loan that you chose will determine your interest rate.
- A 30-Year Fixed Loan has a lower payment that a 15-Year Fixed Loan, but it comes at a higher rate.
- A 15-Year Fixed Loan has a higher payment than a 30-Year Fixed Loan, but it is at a lower rate.
- 3,5,7 and 10-Year ARMs and Interest Only Loans typically have a lower interest rate and payment. However, they do no not have the security beyond their respective fixed periods.
The two questions that you should ask yourself when choosing a mortgage are:
- Can and do I want to afford this payment obligation?
- Does the fixed amount of time of my mortgage match my timeline for the home?