When buying a house, you want to know that you’re getting the best possible interest rate. But that’s going to depend on your current credit score. After all, those with higher credit scores are likely to have better interest rates. And those who will lower will see higher interest rates. But just what are the average mortgage interest rates?
The average mortgage interest rate is going to vary depending on several factors. It’s not just about your credit score, though that will be a significant factor. It’s also about economic growth, inflation, and the overall state of the market itself. That’s what will set the overall mortgage interest rate range.
Once you account for all those factors, you’ll see that the average interest rate doesn’t reflect what you may have received as a quote from your bank or lender. Moreover, it may not reflect what you’ve seen or heard others receive either. Why is that? It’s because you all have different credit scores.
Your bank or whomever you go to to get a mortgage will look at several factors, some of which you can find on your credit report. Then, based on your credit score and the information they find on your report, they’ll decide whether you’re a reasonable risk. That means whether you’re likely to pay back to mortgage according to the terms.
Average Mortgage Interest Rates for a “Good Risk” Client
If they think you are a good risk, they’ll give you a lower interest rate and, therefore, lower payments. That means they will get less money from you over the life of the loan and less each month because they believe that you will pay the money back in full.
On the other hand, if you have poor credit, you may be deemed a ‘bad risk,’ which means you’re less likely to make the payments according to the terms set. If a lender considers you a ‘bad risk,’ they may deny your loan entirely or give you a higher interest rate and, therefore, a higher monthly payment.
That higher monthly payment will mean you pay even more over the entire length of the mortgage because even a few percentage points can make a huge difference over 30 years. This difference means that you should look at average mortgage interest rates for your credit score or at least your credit range before deciding that you’re ready to make that investment.
If you are ready, or you’d like to find out more about your options for getting a loan and what are the average mortgage interest rates, contact LoanDepot to find out more.