The next factor is Down Payment.  An individual having a larger down payment will get a better interest rate.  In mortgage language it’s called Loan to Value (LTV).  LTV expresses the loan size in comparison to the value of the property.  The greater investment you make in your property, the less risky you are to the lenders, which equates to better interest rates.  In addition, keep in mind that if you put down less than 20%, you will pay Private Mortgage Insurance.  Private Mortgage Insurance does not cover you as a borrower it covers the lender.  This blog is not meant to state that a borrower should always put down 20%, it is just information to let you know that the interest rate may be slightly higher with less than 20% down.

Stay tuned for part three…Credit Score.  Credit Score has a Huge impact on interest rates! We will go into detail on how the credit bureau’s calculate your score and what a buyer should know before looking into a home.