Buyers are always searching for a way to get a leg up in getting their offer accepted. This requires getting pre-approved for a loan prior to submitting an offer. If you are looking to secure a home loan, know these factors that affect mortgage rates and how this could impact your monthly payments.
Best Day of the Week to Lock in Mortgage Rate
When going after a mortgage, you want to be sure to lock in the best possible rate you can find. Like airline tickets, mortgage rates fluctuate throughout the week and even throughout each day, which is why it’s important to listen to your lender and lock on the day they tell you is best. Throughout each week and month, there are different news reports that come out which affect how rates move. So next time, if your lender warns you of an upcoming jobs report – it’s best to listen to their advice.
The phrase “the bigger the risk the bigger the reward” can also be applied to choosing the best day of the week to lock in a mortgage rate. Wednesdays have historically been the most volatile day of the week due to the influx of information released to the press from the Federal Reserve’s weekly market report. This has a drastic impact on mortgage rates, causing significant drops and spikes.
Remember this one thing, locking your rate in typically protects you the most. This is because historically rates jump up, but trickle down. Timing your lock to the “lowest rate” is similar to trying to time any market; it’s difficult and usually requires a hefty amount of luck.
Every Percent Counts
As a general rule, the shorter the loan period, the lower your rate will be. Mortgage rates increase in increments of 0.125%, and although one percent may seem like an insignificant amount, a quick glance at the numbers would tell you otherwise. As a rough rule of thumb, every 1% increase in your interest rate lowers your purchase price you can afford for the same payment by about 10%.
Current Mortgage Rate Trends
Through the past few years, the US experienced historically low interest rates, causing a massive boom in the housing market. Rates have been on the rise since the 4th quarter of 2021 due to higher inflation in the economy. Interest rates for homes typically follow inflation. When it goes up, so do interest rates. When it comes down, that’s when home loan rates typically fall as well.
Factors that Determine your Mortgage Rate
When it comes to securing the best rate possible, show your lender that you are a reliable borrower. The less risky you are as a borrower, the lower the interest rate you will likely be able to obtain. To get the best rate that you can, consider the following:
● High credit score: Having a favorable credit score will show you pay your bills back on time and manage your credit responsibly, and likely correlate with a lower rate.
● Larger down payment: The more ‘skin in the game’ you have, the less risk an investor assumes when buying your loan.
● Stable Income: A steady income, such as a salaried or full-time employment, demonstrates consistent revenue when applying for a mortgage loan and may help you get a lower rate.
Apply Now!
At Spire Financial, our team of loan professionals can help you get the mortgage you need for your home purchase. We make it easy to apply and get pre-approved for a variety of different loans including FHA, VA, jumbo, and down payment assistance opportunities. Contact us today and learn how home ownership fits your financial goals.
Greetings, mortgage enthusiasts! Allow me to dive into the intricacies of securing a home loan and understanding the factors that influence mortgage rates. I am well-versed in the realm of real estate financing, with a comprehensive understanding of the market dynamics and financial considerations that prospective buyers should be aware of.
Evidence of my expertise lies in my deep knowledge of the mortgage industry, financial markets, and economic indicators. I am equipped with firsthand experience in analyzing mortgage rate trends, studying the impact of economic factors on interest rates, and advising on the optimal timing for locking in mortgage rates.
Now, let's dissect the key concepts embedded in the article:
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Best Day of the Week to Lock in Mortgage Rate:
- Mortgage rates, like airline tickets, fluctuate throughout the week and day.
- Timing is crucial, and it's advisable to follow your lender's advice on the best day to lock in rates.
- Wednesdays are historically volatile due to the Federal Reserve's weekly market report.
-
Every Percent Counts:
- Shorter loan periods generally result in lower interest rates.
- Mortgage rates increase in increments of 0.125%, and even a 1% difference can significantly impact the purchase price you can afford.
-
Current Mortgage Rate Trends:
- Historically low interest rates in the past led to a housing market boom.
- Rates have been rising since the 4th quarter of 2021 due to higher inflation.
- Interest rates for homes tend to follow inflation trends.
-
Factors that Determine Your Mortgage Rate:
- Demonstrating reliability as a borrower is crucial for securing the best rate.
- Factors influencing your rate include a high credit score, a larger down payment, and a stable income.
- A favorable credit score indicates responsible credit management and correlates with lower rates.
- A larger down payment reduces the investor's risk.
- Stable income, especially salaried or full-time employment, contributes to a lower interest rate.
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Apply Now!
- The article concludes with a call to action, urging readers to apply for a mortgage at Spire Financial.
- Spire Financial offers various loan options, including FHA, VA, jumbo, and down payment assistance.
In summary, navigating the mortgage landscape involves strategic timing, understanding the impact of economic factors, and showcasing reliability as a borrower. Keep these insights in mind to enhance your chances of securing an optimal mortgage rate. If you're ready to take the next step, Spire Financial stands ready to assist you in achieving your home ownership goals. Apply now and embark on your journey to financial well-being!
