One of the biggest contributing factors to the overall cost of buying a house is the interest rate you pay on your mortgage. The lower it is, the less you’ll end up paying the lender and the higher it is, the more you’ll owe over the life of the loan. Before you can start applying for financing, you need to understand the current home loan interest rates people are getting from their lenders.
The Average Rate in Colorado
In Colorado, most new homeowners are paying between 3.1 percent for a 15-year fixed-rate loan and 3.25 percent for a 30-year fixed-rate loan. The interest rates vary based on the type of loan, the lender, and the current market conditions. However, the Colorado mortgage market tends to mimic the national average. This is good news if you’re not quite ready to commit to buying a home. The rates likely won’t go up dramatically unless the national average does.
What Influences Your Interest Rate?
Though interest rates on current home loans tend to follow the national average, there’s no guarantee that you’ll get the average interest rate. Some factors influence the interest rate that lenders assess on your loan. These are the most common factors you’ll need to keep in mind.
Your Credit Score
Your credit score is what lenders look at when deciding if they want to issue you a loan. Higher credit scores tend to earn lower interest rates and lower scores earn higher interest rates. If your score is on the low side, you’ll likely receive a current home loan interest rate well above the industry’s average.
Your Down Payment
Lenders want to see that you’re serious about buying a house. The best way to do that is to have at least 20 percent of the home’s purchase price saved up to secure the loan itself. If you don’t have a 20 percent down payment saved up before you apply, lenders may give you a higher interest rate.
The Type of Loan
Shorter mortgage loans tend to have lower interest rates since you’ll pay larger premiums each month. So do government-backed mortgage loans. The best way to guarantee that you’re getting the lowest interest rate is to shop around and look at different loan options.
Work with an Expert
At Mortgage Solutions Financial, we specialize in helping buyers get the best current home loan interest rates possible. Contact us to learn more or apply for a loan online.