Tag Archive for: Credit Score

Mortgage Terms, Explained: No Jargon, Just Answers

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Let’s be honest: the mortgage process can feel like learning a whole new language. Between acronyms, industry lingo, and legal-sounding terms, it’s easy to feel overwhelmed. That’s why we’re breaking it all down — no jargon, just clear answers — so you can feel confident every step of the way.

Whether you’re a first-time buyer or need a refresher, here are some common mortgage terms explained in plain language:

Pre-Approval

What it means: A lender reviews your financial information and tells you how much you can borrow.
Why it matters: It shows sellers you’re serious and ready to buy — like a permission slip to shop for a home.

Down Payment

What it means: The amount of money you pay upfront toward your home.
Why it matters: A higher down payment often means lower monthly payments and better loan terms.

Interest Rate

What it means: The cost of borrowing money from your lender, shown as a percentage.
Why it matters: Lower interest rates = less money paid over time. Your rate depends on your credit, loan type, and market conditions.

Rate Lock

What it means: A guarantee that your interest rate won’t change between pre-approval and closing, usually for a set time.
Why it matters: Protects you if rates go up before your loan is finalized.

APR (Annual Percentage Rate)

What it means: Your interest rate plus other loan-related fees, shown as a yearly percentage.
Why it matters: It helps you compare the total cost of different loans — not just the rate.

Loan Estimate

What it means: A document that outlines your loan details, including interest rate, monthly payment, and closing costs.
Why it matters: It helps you understand the full cost of your mortgage and compare offers from different lenders.

Escrow

What it means: An account where part of your monthly payment is set aside to cover property taxes and insurance.
Why it matters: It keeps you from getting hit with big bills all at once.

DTI (Debt-to-Income Ratio)

What it means: A comparison of your monthly debt to your income.
Why it matters: Lenders use it to see if you can afford a mortgage. Lower DTI = better approval odds.

Closing Costs

What it means: Fees paid at the end of the mortgage process (loan origination, title insurance, taxes, etc.).
Why it matters: Usually 2–5% of the home’s price, so it’s important to budget for them.

Underwriting

What it means: The lender’s process of verifying your financial info to approve the loan.
Why it matters: It’s the final review before the loan gets the green light!

Final Thoughts

Understanding mortgage terms shouldn’t feel like decoding a secret message. When you work with a lender who explains things clearly and honestly (like us!), you’ll feel empowered — not overwhelmed.

Still have questions? We’ve got answers.
Reach out anytime — we’re here to make the mortgage process simple, clear, and stress-free from start to finish.

The Mortgage Paperwork Checklist: What You Need and Why

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Buying a home is an exciting journey, but if there’s one part that can feel overwhelming, it’s the paperwork. From pay stubs to tax returns, lenders ask for a lot of information to make sure they fully understand your financial situation before approving your loan.

But don’t worry! With a little preparation and organization, you can keep the process smooth and stress-free. Let’s break down the essential documents you’ll need, why they matter, and how to stay on top of it all.

Income and Employment Verification

What you’ll need:

  • Recent pay stubs (usually the last 30 days)
  • W-2 forms from the past two years
  • Tax returns (especially if you’re self-employed)
  • Year-to-date profit and loss statements (for business owners)

Why it matters:
Lenders want to verify that you have a steady, reliable source of income to comfortably cover your future mortgage payments. If you’re self-employed or have multiple income streams, expect to provide additional supporting documents to show consistent earnings.

Asset Statements

What you’ll need:

  • Recent bank statements (checking and savings accounts)
  • Retirement or investment account statements

Why it matters:
These documents prove that you have enough money for the down payment, closing costs, and reserves if required. They also help your lender see if there are any large deposits or unusual activity that needs to be explained.

Debt and Liability Information

What you’ll need:

  • Monthly statements for credit cards, auto loans, student loans, or other debts
  • Documentation for any alimony or child support obligations (if applicable)

Why it matters:
Lenders use your debt information to calculate your debt-to-income (DTI) ratio, a key factor in determining how much you can safely borrow.

Identification and Personal Documentation

What you’ll need:

  • A government-issued photo ID (driver’s license or passport)
  • Social Security number (or documentation for alternative identification, if applicable)

Why it matters:
These items help confirm your identity and protect against fraud.

Other Possible Documents

Depending on your unique financial situation, lenders may also request:

  • Divorce decrees
  • Gift letters (if part of your down payment is a gift from family)
  • Rental history or current lease agreement
  • Proof of additional income, like bonuses or commissions

How to Stay Organized

A big part of speeding up the mortgage process is being organized from the start. Here are a few tips:

  • Create a dedicated folder (digital or physical): Keep all requested documents in one place so they’re easy to access.
  • Respond quickly: The faster you provide updated documents, the smoother (and faster!) your process will go.
  • Ask questions: If you’re unsure why something is needed, don’t hesitate to ask your lender. A great lending team will always be happy to explain.

Final Thoughts

While the paperwork can feel daunting, each document plays an important role in helping your lender understand your financial picture and secure the best possible loan for you. Being prepared not only reduces stress but can also help you get to closing day even faster.

At Michigan Mortgage, we’re here to guide you through every step, including that stack of paperwork.

Ready to get started? Let’s make your homeownership journey as smooth as possible.

How to Choose a Mortgage Lender: A Homebuyer’s Guide

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Choosing the right mortgage lender is an important decision, and not always the easiest. With so many options out there, including banks, credit unions, and mortgage companies, it can be hard to know where to start.

If you’ve been searching “how to choose a mortgage lender,” you’re not alone, and you’re in the right place. This guide breaks down what to look for, what to avoid, and the right questions to ask so you can move forward with confidence.

Know What You Need in a Lender

Before you start comparing rates or filling out applications, take time to define what you need, not just in a mortgage, but in the lender who will help you get there. The right lender isn’t just about numbers; it’s someone who understands your financial situation and offers the right solutions to match.

Understand Your Mortgage Needs

Start by thinking through your goals and financial picture:

  • What’s your monthly comfort zone? Factor in taxes, insurance, and maintenance along with your mortgage payment.
  • How long will you stay in the home? A long-term stay might favor a fixed-rate loan, while a shorter-term plan could make an adjustable-rate option more appealing.
  • How much can you put down? A larger down payment might qualify you for better rates, but there are also low and no-down-payment options if needed.

Clarifying these priorities early helps you focus on lenders who offer programs that align with your financial goals, whether that’s stability, flexibility, or support for unique circumstances.

Identify Your Borrower Type

Every buyer’s journey is different, and your background may influence which lenders and loan options are best for you. Consider where you fit:

  • First-time buyers may benefit from added guidance and access to programs that reduce upfront costs.
  • Self-employed individuals often require a lender experienced in evaluating non-traditional income.
  • Veterans, rural buyers, and low-to-moderate income borrowers may qualify for alternative loan programs.

Explore Special Loan Programs You May Qualify For

Special loan programs can lower the barrier to entry for many buyers, but only if your lender knows how to navigate them. These options can include:

  • FHA Loans – Backed by the Federal Housing Administration; FHA loans are ideal for buyers with lower credit scores or limited savings.
  • VA Loans – Offered to eligible veterans, service members, and surviving spouses with zero down and no mortgage insurance.
  • USDA Loans – Designed for rural areas, USDA loans feature no down payment and reduced mortgage insurance costs.
  • Down Payment Assistance (DPA) – Local or state programs (like MSHDA in Michigan) can help cover your down payment or closing costs.

Not all lenders offer these programs, so if you are interested in seeing if you qualify, choose a lender who has the expertise to guide you through the requirements.

Research the Different Types of Mortgage Lenders

Not all mortgage lenders operate the same way. Rates, loan programs, fees, and flexibility can vary depending on the type of institution.

Common mortgage lenders include:

  • Banks and credit unions
  • Online lenders
  • Independent mortgage companies
  • Mortgage brokers

Mortgage companies often provide the broadest selection of loan products, including government-backed programs and down payment assistance options.

Get Pre-Approved Before You Shop

Once you’ve narrowed down your mortgage needs and explored loan options, the next step is getting pre-approved. A preapproval is a crucial step that gives you clarity and a competitive edge in the homebuying process.

What is a mortgage pre-approval?

It’s a lender’s written estimate of how much they’re willing to let you borrow, based on your income, credit, debt, and assets. Unlike prequalification, which is often just a quick estimate, pre-approval involves verifying your financial documents and running a credit check.

Why it matters:

  • You’ll know your budget. Pre-approval helps you focus your home search on what you can truly afford.
  • You’ll be taken seriously. Sellers and real estate agents are more likely to prioritize your offer if you’re already pre-approved.
  • You’ll move faster. In competitive markets, having pre-approval in hand can give you the speed advantage you need to make a strong offer quickly.

What documents do you typically need?

  • Recent pay stubs or proof of income
  • W-2s or tax returns
  • Bank statements
  • ID and Social Security number
  • Authorization for a credit check

Evaluate Communication, Customer Review, and Lender Reputation

When choosing a mortgage lender, trust and communication go hand in hand. A lender might advertise a competitive rate, but if they’re hard to reach or poorly reviewed, the process can quickly become stressful. Here’s how to assess both reputation and service quality:

Do your research:

  • Check customer reviews on Google, Zillow, or LendingTree.
  • Look for consistent feedback about responsiveness, clarity, and reliability.
  • Use the NMLS Consumer Access site to confirm licensing and spot any disciplinary actions.

Test their communication early:

  • Are they quick to respond to your calls or emails?
  • Do they explain things clearly and thoroughly?
  • Do they offer multiple ways to connect (phone, email, video, in-person)?
  • Are they proactive with updates and timelines?

Why it matters:

You’ll be working closely with your lender during a high-stakes financial decision. Choosing someone who’s both reputable and communicative helps ensure your loan experience is smooth, transparent, and stress-free.

Ask Questions Before You Commit

Even after narrowing down your options, don’t feel pressured to rush into a decision. Choosing a mortgage lender is a major financial commitment, and asking the right questions up front can help you avoid unexpected issues later. A good lender will welcome your questions and answer them clearly.

Here are a few things to ask:

  • What’s the estimated timeline from application to closing?
  • Will I have a dedicated loan officer to work with throughout the process?
  • What communication methods and frequency can I expect?
  • Are there any current special offers/incentives I qualify for?
  • Are there any lender-specific fees I should know about?
  • What’s your policy on rate locks, and how long is mine good for?
  • Is there a prepayment penalty if I decide to pay off my loan early?

Why it matters: Asking these questions helps you gauge how transparent, responsive, and experienced a lender really is. It’s also a chance to understand the full cost of borrowing and avoid surprises when you get to the closing table.

Ready to Choose the Right Mortgage Lender?

Knowing how to choose a mortgage lender can make loan shopping easier. It’s all about working with someone who understands your goals, simplifies the process, and earns your trust. That’s exactly what you’ll find with Michigan Mortgage.

Our experienced loan officers take the time to understand your needs and walk you through your options with clarity and confidence. In addition, we are equipped to help buyers with specialized loan programs, including MSHDA, VA, USDA , first-time buyer support, zero-down options, and fast closings.

Let’s find the mortgage that fits your life. Contact us today to get personalized guidance and take the next step toward homeownership with confidence.

Why Is the Mortgage Process So Long?

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Understanding the timeline, what’s happening behind the scenes, and how you can help speed things up.

Buying a home is exciting, but if you’ve ever felt like the mortgage process drags on forever, you’re not alone. Many buyers are surprised at how much time it takes between applying for a loan and finally closing on their dream home.

So… why does it take so long? Let’s pull back the curtain on the mortgage process and give you some helpful tips to keep things moving.

The Typical Mortgage Timeline

While every loan is different, the average mortgage process takes around 30–45 days from application to closing. Some may wrap up sooner, while others take longer depending on several factors.

Here’s a general breakdown of the timeline:

  1. Pre-Approval (1–3 Days)

    A lender reviews your financials and provides a letter showing how much you’re qualified to borrow.

  2. House Hunting (Varies)

    This part is totally in your hands! Some buyers find “the one” quickly, while others take weeks or months.

  3. Loan Application (1–3 Days)

    Once you have an accepted offer, you’ll complete a full mortgage application and provide detailed financial documents.

  4. Processing & Underwriting (1–3 Weeks)

    Behind the scenes, the lender reviews everything: income, credit, assets, tax returns, employment, and more.
    The underwriter ensures the loan meets guidelines and may request additional info (called “conditions”).

  5. Appraisal & Inspection (1–2 Weeks)

    An appraisal ensures the home’s value matches the loan amount. Inspections (while optional) protect you from surprises.

  6. Final Approval & Closing (1–2 Weeks)

    After all documents and conditions are cleared, you’ll get a clear-to-close. Then comes the final walkthrough and closing day!

What’s Taking So Long?

It may seem slow, but a lot is happening behind the scenes:

  • Verifying Documents: Lenders must carefully check pay stubs, tax returns, bank statements, and more.
  • Third-Party Delays: Appraisers, inspectors, title companies, and insurance providers are all integral to the process, and each has its own specific timeline.
  • Regulations: Mortgage lending is highly regulated to protect buyers, but that also means more boxes to check.
  • Loan Volume: During busy seasons, such as spring and summer, processing times may be longer due to high demand.

How You Can Help Speed Things Up

Good news — there are a few things you can do to help your mortgage process move faster and smoother:

  1. Get Pre-Approved Early

    Know your budget and streamline the process once you find a home.

  2. Respond Quickly

    When your lender requests documents or signatures, the faster you reply, the faster things move.

  3. Stay Financially Stable

    Avoid big purchases, job changes, or new credit applications during the process.

  4. Keep Documents Organized

    Have your W-2s, tax returns, bank statements, and ID ready to go.

  5. Work With a Responsive Lender

    Partnering with a proactive, communicative mortgage team (like ours!) can make all the difference.

Final Thoughts

Yes, the mortgage process can feel long, but that’s because your lender is working hard to make sure your loan is rock-solid. With a little preparation, the right mindset, and the right team, you can make it through with fewer delays and less stress.

At Michigan Mortgage, we walk with you every step of the way — keeping you informed, on track, and moving toward the keys to your new home.

Ready to start your mortgage journey?
Let’s talk! Our friendly loan experts are here to guide you from pre-approval to closing day and beyond.

FICO Score

How Your Credit Score Impacts the Home-Buying Process

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Your credit score plays a crucial role in the home-buying journey. Whether you’re just beginning to think about purchasing a home or already shopping for mortgage options, understanding how your credit impacts the process can help you plan ahead and secure the best possible deal.

Why Credit Scores Matter

Mortgage lenders use your credit score to evaluate how likely you are to repay your loan. The higher your score, the more favorable your terms will likely be. Here’s how your credit score can affect the process.

  • Loan Approval: Most lenders require a minimum credit score to qualify for a mortgage. Conventional loans often require at least a 620, while FHA loans may accept scores as low as 580.

  • Interest Rates: A higher credit score usually results in a lower interest rate, which can save you thousands over the life of your loan.

  • Loan Programs: Some government-backed loans or first-time homebuyer programs may only be available to borrowers with certain credit thresholds.

  • Private Mortgage Insurance (PMI): If your credit score is lower, you may pay higher PMI premiums if you put down less than 20%.

Tips to Improve Your Credit Score

Improving your credit score can take time, but small, consistent steps can make a big difference.

  1. Check Your Credit Reports: Review your reports from all three major bureaus (Experian, Equifax, and TransUnion) to ensure there are no errors or outdated information.

  2. Pay Bills on Time: Payment history makes up a large portion of your score. Set reminders or automate payments to avoid late fees.

  3. Reduce Credit Card Balances: Keep your credit utilization below 30% of your available limit. Paying down high balances can quickly boost your score.

  4. Avoid Opening New Accounts: Each new account triggers a credit inquiry, which can slightly lower your score. Hold off on opening new credit lines during the mortgage process.

  5. Keep Old Accounts Open: The length of your credit history affects your score. Don’t close old cards, even if you don’t use them often.

Final Thought

Your credit score can open doors — or create obstacles — in the home-buying process. By taking control of your credit now, you’ll be in a stronger position when you’re ready to make an offer on your dream home.

Need help understanding how your credit score affects your mortgage options? Reach out — we’re here to guide you every step of the way!

Tips to improve your credit score

Five Ways to Improve Your Credit Score Before Buying a House

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House hunting is an exciting time, but before you leap into finding the perfect home it’s important to do the prep work. One of the best ways you can set yourself up for success is by taking a close look at your credit score. Your credit score is key to determining the interest rate you will pay on your mortgage.

Here are five ways you can improve your credit score to get the best rate possible.

Know Your Score

It is a good idea to know your credit score before you take on any big investment. After paying off debt, it can take some time to see the change reflected on your score. This is why we recommend checking your score annually.  Visit www.usa.gov/credit-reports for information on how to check your credit report.

Identify and Fix Errors

Once you have your credit report in hand, it is important to take a close look and ensure there are no errors. You want to look at your accounts and balances to verify they are at accurate amounts. Keep in mind it may take a while for balances to be updated on your credit score after a recent payment. If you notice any errors or suspicious activity on any of your credit reports, contact the credit bureau issuing that report and have them correct the information.

Pay Down Debt

Not all debt is inherently bad, but having a lot of revolving debt makes you less appealing to lenders. It is a good practice to pay off as much as you can. At the least ensure you make the minimum payment each month, and if possible, aim for a larger amount. It may be beneficial to consider asking for higher credit limits. Higher limits will improve your credit utilization — if you don’t increase your balance to match.

Don’t Miss Payments

Keeping your accounts in good standing is more important than you think. Even missing a few payments can bring down an otherwise excellent record. Setting up automatic payments using a bank account routing number is the best way to ensure no errors are made.

Limit your Credit Inquiries

It may be tempting to apply for loans and cards due to intriguing bonuses and benefits, but all these applications generate hard credit inquiries. Be mindful of inquiries you decide to opt-in for and be confident that you will be approved. It is important to remember that no matter how tempting, every single inquiry shows up on your credit report and can easily hurt your score.

The more you know about your credit, the easier it will be to work on improving your score. Most credit scores range from 300 to 850 and rank from bad to excellent. Having a higher score shows the lender you are at a lower risk of deficiency and therefore receiving an offer for a lower interest rate. You want to aim for a credit score between 720 and 850.

Each positive action is one step closer to receiving the best interest rate possible and landing your dream home!

Spring Welcome Mat

How to Get Pre-Approved for a Mortgage

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In a competitive market, it pays to be pre-approved.

We strongly encourage our customers (as well as our friends and family!) to get pre-approved before they start house hunting.

To get pre-approved for a mortgage, you will need to provide some personal and financial information to your Loan Officer.

Here are some of the things you will need to have.

  • Proof of income: You will need to provide proof of your income, which can include recent pay stubs, W2s & tax returns.
  • Employment verification: The lender may need to verify your employment, so you will need to provide contact information for your employer.
  • Credit score: Your credit score is an important factor in the mortgage pre-approval process. You can get a free credit report from one of the major credit bureaus, Equifax, TransUnion or Experian, to check your credit score before you apply.
  • Debt-to-income ratio: Lenders will want to know your debt-to-income ratio, which is the amount of debt you have compared to your income. You will need to provide information on any outstanding debts, such as credit card balances or car loans.
  • Down payment and closing costs: You may need to have some money saved for a down payment on the house you want to buy. The amount of the down payment will depend on the price of the house and the loan program that’s best for your unique situation. Some programs do not require a down payment, but you may still be responsible for covering closing costs.
  • Identification: You will need to provide a government-issued ID, such as a driver’s license or passport.

Once you have provided all the necessary information, your Loan Officer will review your application and let you know if you are pre-approved for a mortgage.

After you have your pre-approval letter in hand, and you know how much you can afford to spend on a home, let the house hunting begin!

First-Time Buyer

Loan Programs Available for First-Time Buyers

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Michigan Mortgage offers multiple loan options designed to help first-time home buyers achieve the American Dream.

FHA Loans.

First-Time BuyerThese loans are backed by the Federal Housing Administration (FHA). This type of loan may be more attractive to someone who has less than perfect credit. They require a down payment of at least 3.5% of the purchase price.

VA Loans.

These loans are available to military veterans and active-duty service members (and their families) and are backed by the Department of Veterans Affairs (VA). They do not required a down payment and may have more flexible credit requirements.

USDA Loans.

These loans are available to buyers in rural areas and are backed by the U.S. Department of Agriculture (USDA). They do not require a down payment so this loan may be perfect for someone with less money saved.

Conventional Loans.

These loans are not back by the government and may have stricter credit and down payment requirements. However, they often have lower mortgage insurance premiums and may be a good option for buyers with good credit and a down payment as low as 3% of the purchase price.

MSHDA Loans.

The MI State Housing Development Authority (MSHDA) offers assistance programs for first-time home buyers, including down payment assistance zero-interest loans.

At Michigan Mortgage, we specialize in making the process as easy as possible for first-time buyers. We are Michigan’s leading lender for first-time buyers and are always available outside of “normal” business hours to help guide you home.

To see how we can help you, contact us today!

Old Technology

Tips to Maintain a Good Credit Score

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If you’re in the market for a new home, your credit score will determine whether or not you’re eligible. Your score will determine the loan program you qualify for and your interest rate. Your credit score may be the single most important asset you have.

You spend years building your score – here are a few tips to help you maintain it.

  1. Make your payments on time. According to experts, a large portion of your credit score (35 percent, to be exact) is calculated based on payment history. Making your payments on time (within 30 days of the due date), every time can greatly impact your score. This includes credit card bills or any loans you may have, such as auto loans or student loans, your rent, utilities, phone bill and so on.

Consider setting up autopay when it’s available so you don’t run the risk of missing payments.

  1. Keep your balances low. 30%. That’s the magic number! As soon as your credit card balance exceeds 30% of your credit limit, your credit score will decrease. Your score will continue to decrease until you bring your balance below the threshold.

Experts recommend that you pay off your entire balance every month. We know that’s not always realistic, but you should always at least make the minimum payment.

  1. Be cautious when opening new accounts. According to Experian, “Each application can lead to a hard inquiry, which may hurt your scores a little, but inquiries can add up and have a compounding effect on your credit scores. Opening a new account will also decrease your average age of accounts, and that could also hurt your scores.”

There is one exception to this rule. If you’re shopping for a new car or home, it’s OK to shop around and have multiple lenders pull your credit. If these credit pulls occur during the same time frame, they are often ignored by credit bureaus.

  1. Check your credit score regularly. If you practice tips 1 – 3 but forget to do #4, you’re setting yourself up for possible risk. Mistakes are known to happen, and reporting errors can have a negative impact on your score. If someone steals your identity and opens a new line of credit in your name, how will you know if you don’t regularly monitor your score?

You are entitled to a free annual credit report from each of the three credit reporting agencies. Click here to order your free reports.

If you find a credit reporting error, dispute the mistakes with the appropriate credit reporting agency and your score may improve.

If you have additional questions about your credit score, give us a call! We’re happy to help in any way we can.

Fall Stoop

How do interest rates impact your home buying power?

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If you’re researching mortgages, you know that they come with interest rates. What exactly is a mortgage interest rate, and how much does it impact your buying power? What can you do to improve the interest rate you’re offered? We answer those questions in this article.

Your mortgage interest rate has a direct impact on how much house you can afford. What exactly is a mortgage interest rate?

Fall StoopA mortgage is a loan, and like other bank loans, it comes with an interest rate – it’s how lenders make enough money to stay in business. This is usually a percentage of the loan amount, and you pay it off alongside the principal. Usually, this makes up your monthly mortgage payment, along with things like private mortgage insurance (PMI), property taxes, and perhaps homeowner insurance.

How Your Mortgage Interest Rate Affects You

As the interest rate is part of your monthly mortgage payment, it directly affects how much of a loan you can afford. Even a small change in your interest rate can add quite a bit. For example, let’s say you bought one of Michigan’s average-priced houses for $210,000.

You managed a 10% down payment and got a conventional 30-year loan. At a 4% interest rate, you’re paying 1,264.40 per month. At 5% interest, this payment increases to $1,376.68. That’s $112 more per month – and 10 more PMI payments.

So, it’s pretty obvious how much your budget is impacted by mortgage interest rates. But what factors affect the interest rates themselves?

What Affects Mortgage Interest Rates?

Banks calculate interest rates based on many things, including the overall economic and market picture and the qualifications of each prospective borrower. We’ve already talked about factors that influence mortgage interest rates elsewhere in this blog, so let’s just do a quick overview of some of the factors you can influence:

  1. Your credit score and credit history.
  2. Your income and debt.
  3. Your down payment amount.
  4. The type of loan you choose.

Although a lot has been said about the Federal Reserve rate rising, it’s important to realize that this doesn’t directly affect your mortgage interest rate. (It does affect other types of loans, like credit cards.) However, the Fed is a good indicator of where the economy is heading, so it doesn’t hurt to keep an eye on it.