Lenders determine their interest rates based on several elements. Economic conditions and investment activity are two influential factors in determining mortgage Las Vegas interest rates. Additionally, Fannie Mae and Freddie Mac set mortgage rates by bundling loans and selling them to investors for a profit. The rates that those investors pay determines the rate limits that lenders can request for their loans.
Calculating the mortgage rate that you’ll pay for a home is important, as it then determines the price that you can pay for a home. A mortgage rate can be calculated for buying or refinancing a home.
By calculating your mortgage rate, you’ll be able to decide the following:
- The right mortgage length
- Whether or not to choose an Adjustable-Rate Mortgage (ARM)
- How much home you can buy
- Your down payment
Two primary types of loans that you can get are shorter-term loans with a 15-year payment structure or 30-year loans. Short-term loans have higher monthly payments compared to 30-year loans, but they have lower interest rates. With a 30-year loan term you will have lower monthly payments, but you will pay more in interest.
You can also determine whether or not to get an adjustable-rate mortgage (ARM) based on your mortgage interest rates. With an ARM, you’ll pay an initial low interest rate. The loan rate can change after that, which means it can either increase or decrease.
Another advantage of calculating your mortgage interest rates is that it gives you a better understanding of how much home you can truly afford. A mortgage payment calculator includes all the costs of buying a home including insurance, taxes, and private mortgage insurance if you make less than a 20% down payment.
Lastly, calculating your mortgage payments allows you to determine how much you can (and should) put down for your down payment. The standard down payment amount is 20%, but some lenders will let you make a down payment lower than 10% based on your qualifications.