RE/Max Integrity
4710 Village Plaza Loop,
Suite 200
Eugene, Oregon 97401
Bridget Armstrong
info@barmstrongrealestate.com
Direct (541) 984-5404
Office (541) 359-8973
Fax (541) 302-4899

Mortgage Information

Items that can affect your mortgage

A mortgage loan amount can increase interest rates if the established conforming loan guidelines are exceeded. This amount can vary from year to year as Fannie Mae and Freddie Mac adjust the loan limits at the beginning of each year. It's always beneficial to be aware of what the conforming loan limits are when discussing program options with your loan officer.

30 year fixed loans are typically 360 payments (30 years) of the same amount (or at least only changing very little over the life of the loan) hence the term 30 year fixed. Your rate stays the same through the entire term unless you refinance the loan. Shorter loans (20 or 15 year repayment loans) can save you thousands in interest over the life of your loan while at the same time giving you a fixed APR rate. You pay a higher payment each month to save that amount but you'll also build equity at a faster pace than someone with the same loan amount amortizing over a 30-year period.

An adjustable rate mortgage also known as an ARM could give you the option to have even a lower payment but they are not fixed for the life of your loan. Depending on the term some are fixed for 2 years or it could be fixed for 5 years, that'll all depend on the program that you and your loan officer agree that suits you best. After the fixed term the rate adjusts with the market. If the rates go up then your rate goes up but at the same time if the rates go down your rate can go down. You always have the option to refinance your ARM into a fixed rate after the fixed portion of the loan is finished. You will want to discuss prepayment penalties with your loan officer to determine when would be the best time to refinance the loan.

While many lenders will finance 100% of your mortgage, a down payment can give you a lower interest rate and payment. The larger the down payment, the lower the rate and in turn the lower the monthly payment you will have to pay. Assuming all things are equal someone with a 20% down payment will pay less per month than someone with a 10% down payment. Coming in with a down payment gives you more equity as collateral while financing the rest. To a lender, if you have a down payment you are a safer investment then a person without one. Be sure to discuss down payment options with your loan officer to determine the appropriate amount to use as your down payment.

Credit quality will affect rates and will also help your loan officer determine the best program that suits your needs. Lower credit scores will generate a higher rate and vice versa the higher the score the lower the rate that a person will get. Someone with a high credit score is perceived to be a lower risk for a lender to invest in. Having a lower credit score shouldn't discourage you from talking to a loan officer to discuss options. Lenders will evaluate your application as a whole and they do take into account that unforeseen events can happen to drop a person's credit score. It will not be the sole factor determining if you are eligible for financing.

Another factor in determining your interest rate and term is your Debt-to-income-ratio also referred to as your DTI ratio. If your monthly income is substantially higher than your current monthly obligations you will have more disposable money to repay your loan. Again, to a lender you are seen as a lower risk and will give you a better interest rate. The higher your obligations the higher the rate will be and in turn the higher the payment. Your gross monthly income (income before taxes are taken out) is used to determine your DTI ratio. If you make $20.00/hr at 40 hours a week then your gross income is $3,200/month. The allowable DTI ratio will vary from lender to lender and different programs will allow different DTI ratios. Your loan officer will help you determine the amount of a loan that you can afford that will not put you into a position where you wouldn't be able to make your monthly payment.

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