Understanding Mortgage Rates Part Two
Filed under Mortgages
If you are one of the people who the bank considers “low risk”, they will usually allow you to borrow the money in with a much lower rate. How does the bank calculate how risky you are? It all depends on how steady your source of income is, for example, if you have a steady high paying job, the bank will be taking less risk and will give you a lower rate.
The lower rates are usually given to people buying a home for the first time, simply because first home buyers don’t own other properties with equity to borrow against and put down for the mortgage they are applying for. This serves as encouragement from the government for first time home buyers to own homes instead of renting. Because having a low mortgage rate makes it alot more affordable to own your own property, it’s encouraged.
If you’re one of the unlucky people the bank considers high risk, you will receive a higher mortgage rate. If you don’t have a steady job or don’t have money saved up to put down for the initial payment or closing costs.
