If you're looking to buy a house, you first need to get pre-approved for a loan. That way, you'll know how much money you can borrow and what your monthly payments will look like.
But how do lenders decide what interest rate to give you? It all comes down to your credit score. Your credit score is a numerical representation of how well you've managed your debt in the past, and it's one of the biggest factors lenders use when deciding whether or not they'll lend you money at all.
A high credit score means you have a good track record of paying bills on time and a stable financial situation. You may qualify for a lower interest rate than someone with a lower credit score.
The Property Location
The location of the property you want to buy is a critical factor that determines the mortgage rates you get. For example, if you are purchasing a home in an area that has recently experienced an increase in crime or foreclosures, lenders will likely charge higher rates on your loan.
The same goes for if the neighborhood has experienced a drop in property values or lower than average income levels.
On the other hand, if there are too many homes for sale in your area, lenders may be less willing to provide borrowers with lower rates to compete for their business.
Type of Interest Rates
Interest rates for mortgages can generally be divided into fixed and adjustable. Fixed interest rates don't change over time, while adjustable ones may have an initial period of stability, after which they fluctuate with the market's ups and downs.
An adjustable-rate loan may start with a lower interest rate than a fixed-rate mortgage, but that rate would increase significantly during the loan term.
The type of mortgage you choose will depend on your needs and circumstances. If you think you may want to sell your home early or refinance, an adjustable-rate mortgage might make sense because it offers lower initial payments than a fixed mortgage.
But if interest rates are likely to rise over time, then a fixed-rate loan might be better since its costs won't increase even if rates go up later.
Down Payment Size
When you make a larger down payment on your mortgage, lenders see this as less risky and give you a lower interest rate. So if you're looking to buy a house, you must have enough cash saved up for a down payment—the more money you put down, the better your rate will be.
On top of that, when you make a larger down payment, you don't have to pay for mortgage insurance—which means one less cost added to your monthly bill.
What if we told you there was another way to help lower your monthly bills? It turns out that some lenders will offer slightly lower rates for mortgages with down payments just under 20% compared to those requiring more significant or no down payment.
When determining mortgage rates today, the most crucial factor is where you live (or intend to live). If your home is a primary residence, lenders know that you're less likely to default on your loan payments than if it were a second home or investment property. So they offer lower rates in exchange for lower risk. This is because if you had financial problems, where would you live?
On the other hand, if you have a second home or investment property and have financial problems, your lender will likely take steps to protect itself. This could involve increasing the interest rate charged on your mortgage – an added expense for which most lenders compensate by charging higher rates.
The Federal Reserve
The Fed doesn't set mortgage rates today but can affect them. When times are good and the economy is booming, the Fed cuts interest rates to make it easier for people to borrow money. That makes mortgages more affordable. But when things go south and people are having trouble paying their bills, the Fed raises interest rates… which makes mortgages more expensive.
The Fed manages short-term interest rates by increasing or decreasing them based on economic conditions; this also impacts long-term interest rates. So when your lender raises rates over time, that's not because they're just being mean—they have to keep up with rising borrowing costs from other banks.
The term of your loan is how long you have to repay the money, and short-term loans generally cost more. Depending on the specifics of your loan—for example, how much lower you'll pay in interest and whether or not you can handle higher monthly payments —a longer loan length could be a good choice.
The last thing you want to do is make sure you're paying more interest than necessary. For example, if you make extra monthly payments or have enough cash to pay your mortgage early, a long time might be right for you. That's why it's essential to consider your loan details before choosing a term.
What Caused the Current Interest Rate Levels?
While we're all trying to figure out what's going on with the economy and why interest rates are so high, it can help to look at what the Federal Reserve has been doing.
The current interest rate levels result from many factors, but it's clear that the Federal Reserve's decision to raise rates is one of the most significant contributors.
What caused the Federal Reserve to raise interest rates? Two main factors have contributed to this move. First, the Federal Reserve has been gradually raising interest rates to normalize monetary policy—which is expected to continue in 2018.
In June 2022, inflation climbed to 9.1 percent—the fastest increase in four decades. That's 0.5 percent more than last year and nearly double the rate of inflation over this time last decade (4%).
How to Get the Best Mortgage Rate Today
If you're looking for the best mortgage rate today, there are several things you can do to ensure you get the best deal possible.
Consider a Shorter Loan Term
First, consider a shorter loan term. If your financial situation is stable, and you plan on staying in your house for a long time, it's tempting to opt for a 30-year mortgage—but by doing so, you may pay more interest over time.
Instead, consider getting an adjustable-rate mortgage with a lower fixed rate that will last for 15 years or less. That way, you'll pay less interest overall and still be able to afford your monthly payments.
Another vital thing to remember is that the longer it takes to repay your loan, the more interest you'll pay over time. A shorter loan term means lower monthly payments and less interest overall!
Improve Your Credit Score
One of the easiest ways to improve your credit is to ensure you're paying off your bills on time. If you don't pay your bills on time, this can hurt you in two ways: First, it can reduce the amount of credit available for borrowing, and second, it can lower your credit score. So make sure you're paying off all debt promptly!
Another way to improve your credit is by opening new lines of credit and making regular payments. This will show lenders that you can manage multiple accounts and make payments promptly without defaulting or missing payments altogether. This will help increase your overall financial responsibility (which lenders care about).
Don't lock yourself into one lender until you've secured the lowest rate possible from at least two other companies. Ensure the lender's reputation matches their low-interest rate; otherwise, you may be paying more than expected.
Consider narrowing your search to local banks and credit unions specializing in mortgages. Not only will they be able to give you a better deal on your loan, but they'll also be more responsive to your questions and concerns.
Work With a Mortgage Broker
Mortgage brokers are licensed professionals who can help you find the right loan and negotiate with lenders on your behalf. They can also guide what type of loan might fit best with your situation and credit history.
Not sure where to start? Ask around for recommendations or look online for reviews before making an appointment with anyone.
Ask About Discounts and Rebates
Several federal government programs offer homeownership incentives, including down payment assistance and zero-down mortgages.
Talk to your lender about these programs before applying for a loan so they can help you determine whether they're suitable for your situation and what documentation is required.
5 Fun Things to Do in Orange County, Florida with Kids
If you're looking for some fun things to do with the kids in Orange County, Florida, look no further. We've got you covered!
Whether you want to spend an afternoon at the beach or an evening at one of our many theme parks, there's something for everyone here in Orange County.
And we're not just talking about Disney World. There are plenty of other options for all ages—from water parks to amusement parks to museums—and everything in between.
Find out what fun things to do in Orlando with kids await!
Shopping, Shopping, And More Shopping
But if you have an aspiring little consumer in your life, the options for fun are endless in Orange County. There are malls with everything from the latest fashions to the most unusual games to try out. If your little one loves animals (or dinosaurs), there are multiple locations where they can pet and play with animals while you shop.
And if they're a little older, they'll love hanging out at the food court while you get some shopping done!
Artifact Exhibition At The Titanic
The Artifact Exhibition in Orlando is a great place to learn more about the iconic ship's history and the events that led to its sinking. At this interactive center, you can see genuine ship artifacts recovered from the bottom of the Atlantic Ocean.
The 20,000-square foot museum also contains actors playing significant roles in the Titanic story and houses over 400 original pieces from the ship. So your kids will learn more about what led to its tragic sinking—events like being struck by an iceberg and improper lifeboat capacity.
Go Hiking at Downtown Winter Garden Hike
If you're looking for a great way to get out and about with your kids, try hiking!
Downtown Winter Garden is home to a great hiking route that's just 7 miles round trip, but it goes through some serious terrain. The trail is shady in spots and sunny in others, so it can be a great way to explore the outdoors on a fantastic day. You'll also see some unique nature along the way!
And best of all? It's free! There's parking right near the trailhead, so there's no need to worry about paying for parking. All you need is some comfortable shoes and sunscreen—and maybe an extra bottle of water if you're going during the summer months—and you're ready to go!
Explore The magic of Harry Potter's world
If you are a Harry Potter fan, visiting Orlando and missing out on the chance to see Hogwarts would be like going to Beijing without visiting The Great Wall.
The Islands of Adventure and Universal Studios Florida have done a remarkable job of bringing the world of Potter to life, recreating its magic for visitors. You can explore Diagon Alley, where the dangers lurking beneath Gringotts bank await you. Or visit Hogsmeade and even step into the portals of Hogwarts castle—an incredible journey through the skies awaits!
The Wizarding World of Harry Potter is an expensive but fantastic experience for any fan of the book series or movies. If you do not have time for multiple days at Universal Studios theme park, consider making it a priority during your stay in Florida.
Wakeboarding At The Orlando Watersports Complex
If you want to do something out of the ordinary while visiting Orlando, try going wakeboarding and paddleboarding at the city's first Aquapark, The Orlando Watersports Complex. Wakeboarding combines elements of surfing, water skiing, and snowboarding. It is gaining in popularity for providing exciting thrills on the water.
Watersports are fun for kids as well as adults! You will enjoy getting your heart pumping as you fly through the air while standing on a board strapped to an engine-powered cable that pulls you along behind it. Kids ages 7-17 are welcome to join in on the action at this facility.
The Orlando Watersports Complex offers lessons in wakeboarding and wake surfing (wearing a life vest). Classes are from professional instructors who know how to teach kids to enjoy these activities without getting hurt or during practice runs around designated areas within the complex's grounds.
It's Time To Move To Orange County, Florida
The fact is, Orange County, Florida is a great place to live. It's got the climate of Florida (which means you don't have to wake up and put on a sweater every morning), but it's not as big as Miami or Tampa. It's got the culture of Orlando, but it's not as crowded. And if you like your winter's cold, well… we won't even talk about that because you'll probably never want to leave.
So whether you're moving down here for work or want to try something new, we encourage you to give Orange County a chance. You'll be glad that you did!