For Americans who will get a mortgage, it is imperative that they must know firsthand the mortgage rates that are applicable in a loan. Why? Because mortgage rate is the deciding factor that dictates the total amount of the mortgage plan. This also makes the big difference in many loan applications. By knowing the lowest and the best mortgage rate, you can save thousands of dollars in interests alone.

Besides the different mortgage rates of lending companies in the US, the mortgage rate in the country varies depending also on the state or location of the house to be built.

Mortgage rate undoubtedly plays a role in lending, it is therefore important for anyone planning to mortgage to find out the current rates before deciding on a mortgage plan. Mortgage rates are unstable and it isn’t easy to determine if these will go down or up. However, there are certain economic indicators that can be used as point of references when the mortgage rate will be affected.

Take note that the rise and fall of bonds and treasury notes has a direct relationship with interest rates including mortgage rates. If you are aware of this relationship, it can help a borrower determine if getting a mortgage in a certain period of time is feasible for him financially. It will also help him get lower mortgage rate and save some costs.

Apart from all these, when a person wants to get a mortgage, he must also understand that several factors affect the mortgage rate one will have from his loan. These factors are:

a. Amount of loan. If the loanable amount exceeds the loan limits created by Freddie Mac and Fannie May for conforming loans, the mortgage rate is increased.

b. The duration of the loan. Shorter loans will mean a lower mortgage rate but higher monthly payments. But having shorter loans will assure you that you will be able to keep thousands of dollars later.

c. Down payment – A higher nonpayment that is more than 20% will give the borrower the best possible mortgage rate. Down payments of 5% or less will require higher mortgage rate.

d. Closing costs. It is advised that a borrower pays the closing cost than let the lender pay this. There is usually the case when borrowers don’t want to pay all of the closing costs, so they get a higher mortgage rate applied to their loan.

e. Adjustable Rate. ARMs or Adjustable Rate Mortgages provides a borrower a lower mortgage rate on the start of the term but payments will also increase as mortgage rate increases over the next period of years.

f. Credit Background. If a borrower has a positive credit record, it usually follows that he gets approved for lower mortgage rate.

g. Income. Besides good credit standing, borrowers with monthly income that’s more than their monthly credit obligations are approved for lower mortgage rate. Borrowers with credit reports but have monthly incomes that barely cover their credit obligations will not be given the lowest available mortgage rate.