When it comes time to purchase your Piedmont or Oakland home, you need to be aware of some of the considerations that lenders will be making when they set your mortgage rate.  Obviously, interest rates are still quite low compared to years ago when they were 10% and more, but even with today's lower rates, the elements involved in rate setting are still important to your home's purchase.

Here are some considerations that come into play:

1. Your Credit Score--While this may seem obvious, this score is their key indicator as to how responsible you are about acquiring debt, and paying it back in a responsible and efficient manner.  A good credit score will go a long way to attracting an appealing mortgage rate.

2. How Much You Plan to Borrow--If you are planning to buy in a highly priced housing market, or plan to buy a very expensive home, you will typically be asking for more than the funds of most "conforming loan limits", and you will need to obtain a jumbo loan, which will typically have a higher mortgage rate.

3. Whether You Are Willing to Pay Points--If you are willing to pay more money upfront to get a lower mortgage rate by paying "points", you should discuss this with the loan officer.  One point is equal to 1% of the loan amount, and by paying points, you could acquire a lower mortgage rate.

4. Whether You Intend to Live In the House--If you plan to occupy your home as your main residence, you will be offered what is called an "owner occupant" mortgage rate, which is generally a lower rate that would be offered if you were buying the home for rental purposes.

Obviously, these are just some of the major elements that are involved in setting your mortgage rate.  There are many more issues that come into play.  As an experienced local real estate agent, I have referrals to local lenders who will work with you to get the one that fits you best. 


Posted by Bruce Wagg on


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