Here’s how to customize your mortgage rate for a better deal

SAN FRANCISCO – Mortgage interest rates are rising, but homebuyers can take some steps to lower their personal mortgage interest rates. Mortgage rates are not uniform. Homebuyers should compare rates from different financial institutions. When comparing rates, they look for the lender that offers the best discounts for their situation.

Anyone who has ever shopped for a house has, in all likelihood, also shopped for a mortgage. When shopping, news stories aren’t much help. The headlines scream, “Rates Hit 5.27%,” but the next headline states that rates have “fallen.”

Keep in mind that these titles are just a general guide to mortgage rates and have little to do with the rate you will pay. This makes it difficult to find a mortgage, especially for first-time home buyers like Charlie and Katie Henderson of Concord.

“It was crazy how, for example, the numbers fluctuate if you want to opt for a lower interest rate, but then you pay more fees.” Charlie said. “I didn’t even know how much those fees were…”

RELATED: Why is the interest rate you pay so much higher than the interest you earn?

Just like most mortgage buyers, homebuyers should go online and check out all those interest rates, monthly payments, and fees.

Solidify Mortgage Advisors Loan Officer Joseph Rivera tells buyers not to get bogged down in what they read in most media reports about current mortgage rates.

“Contrary to popular belief,” says Rivera, “every interest rate a homebuyer finds themselves at is pretty much tailor-made or tailored to their specific situation.”

When homebuyers read a mortgage rate online or hear one on TV, they should keep in mind that it is an average or median rate and is probably not what you will pay.

“The lender will assess what they consider to be the perceived risk; the higher the risk, the higher the interest rate,” says Rivera, “and the higher the cost will be to the borrower.”

Now that’s something you can work with. Here’s how to lower your mortgage interest rate.

A good credit score lowers your mortgage interest rate; the same goes for a lower loan amount. A large down payment can also lower your interest rate. Your “debt to income” ratio – how much you owe compared to how much you earn – plays a role in the interest rate you’ll be offered. Also, buying a single-family home versus a condo can lower your interest rate.

VIDEO: 30-year mortgages see highest rate in over a decade

Homebuyers can’t control what the Federal Reserve does or how the big banks act, but they do have some control. Every small change to your individual position can potentially lower your interest rate by 1/8th of a point…and an eighth of a point here and an eighth of a point there can be big savings.

“So it all depends,” Rivera says, “but generally your concept is correct. All of those things that you can do to reduce the risk to the lender will be rewarded in pricing.”

Really work, and you can cut your interest rate in half, maybe even a full percentage point. Over thirty years is real money. The important thing is to get together with a good loan officer and go over all those little adjustments.

Check out more stories and videos from Michael Finney and 7 On Your Side.

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