Several key factors influence mortgage rates, including:
- Credit score: A higher credit score generally qualifies you for lower interest rates.
- Debt-to-income ratio: The percentage of your monthly income that goes towards debt payments. A lower DTI ratio indicates a stronger financial position and can lead to better rates.
- Loan-to-value ratio (LTV): The percentage of the home’s value that you’re borrowing. A lower LTV ratio, achieved by making a larger down payment, can result in more favorable rates.
- Loan term: The length of time you have to repay the loan. Longer loan terms typically come with higher interest rates.
How can I improve my credit score?
Enhancing your credit score is crucial for securing the best mortgage rates. Here are some effective strategies:
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