Big Factors That Can Affect Your Monthly Mortgage Payment

Before buying a home, you need to apply for a mortgage in order to afford the house you’re buying. You will then begin making mortgage payments in order to repay this loan. Knowing what factors impact your mortgage payment can help you find the best option for you.

The Down Payment

When you buy a home, you also need to include a down payment. While there are some requirements for how much your down payment will be, you do have some choice in how much you actually pay. According to Lemonade, putting down a higher amount than what’s necessary can help you to get a lower mortgage payment. Additionally, having a higher down payment will present you as a low-risk borrower and it’s likely more lenders will be willing to give you a loan. This will allow you to shop around and compare the different rates.

Your Mortgage Rate

A mortgage rate is the rate of interest you will be paying on your loan. The higher the rate, the higher your payment will be. Your mortgage rate is affected by several factors including the current economic situation. Some people may even take advantage of a favorable economic situation and refinance their mortgage. This allows them to get a new mortgage rate. When you are first getting your rate, you can also take steps to adjust it. According to Equihome Mortgage, you can use points to lower your mortgage rate. In order to use points, you will purchase a certain amount that is directly proportional to the cost of the home. Using a point can allow you to reduce your mortgage rate.

Your Mortgage Term

When you take out a mortgage, you determine the length of time that you will be paying that mortgage. You will either take out a 15 or 30 year mortgage. Since the 30 year mortgage is longer, you have more time to pay off your loan. This also means that your payments will be lower since they are spread out over a longer period of time. As you debate which option is best for you, keep in mind that a longer term also comes with a longer period of paying interest and it could result in you paying more overall.

Knowing what affects your mortgage payments can help you to make helpful decisions when you are negotiating your mortgage loan. You can take measures to lower your payment to make it more manageable.

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