Mortgage rates are close to 7% for a 30-year fixed mortgage, according to the St. Louis Federal Reserve. Dallas mortgage trends aren't moving downward as much as expected this year, which adds to the cost of buying a home.
You want to get the best mortgage deals for your real estate purchase. It can save you hundreds of dollars a month. Learn what determines home loan rates and how to get better terms.
How Are Mortgage Rates Set?
Several factors affect mortgage rates. Market factors combine with your personal financial situation to determine the rate lenders will offer you.
Federal Reserve
The Federal Reserve (Fed) controls short-term interest rates. When the Fed raises or lowers the interest rate, mortgage rates usually follow.
Bond Market
Mortgage-backed securities are bundles of mortgages sold on the bond market. If the price of mortgage bonds is high, mortgage rates go down. If the price of bonds is low, mortgage rates rise.
Inflation and the Economy
Inflation has been a major influence on mortgage rates the last few years. Rising inflation means interest rates rise to keep up with the value of the dollar.
When the overall economy is weak, mortgage rates usually decrease. Rates usually increase when the economy is strong because people are more willing to spend money.
Your Financial and Credit Status
Lenders look at your financial and credit status when determining home loan rates. If you have a high credit score, your mortgage rate will be lower. You're less risky for the lender.
Lenders also look at two ratios:
- Loan-to-value (LTV)
- Debt-to-income (DTI)
The LTV compares how much you want to borrow to the price of the property. Your DTI looks at your total debt obligations compared to your income. When these ratios are lower, you usually get a lower mortgage rate.
How to Get the Best Mortgage Deals
You can't control market factors. However, you can improve your personal financial status to get a better mortgage rate on the home you want.
Boost Your Credit Score
You can improve your credit score by paying bills on time and pay down your other debts. Check your credit report regularly and dispute any errors.
Lower Your Debt-to-Income Ratio
Lenders usually want a DTI of 36% or less. Paying down your credit cards and other debt will improve your DTI.
Make a Larger Down Payment
A larger down payment lowers your LTV, which can lower your mortgage rate. You should be prepared to put at least 20% down.
Compare Lenders
One of the most important mortgage and refinancing tips is to do a mortgage rate comparison. Even if the rates are the same, the fees and other costs can differ between lenders.
Take Advantage of Dallas Mortgage Trends
Mortgage rates are still high, but they're finally starting to decrease. You can get a better rate by improving your financial position and credit score. A mortgage rate comparison from multiple lenders will help you get the best terms.
When you're ready to buy real estate in the Dallas area, you can rely on the professionals at PMI Alliance. We can help you find your next home or investment property. We deliver quality, value, and results.
Contact the realty team at PMI Alliance today to discuss how we can help you get into your dream property.
