When it comes to Indianapolis mortgage rates, there are a lot of questions out there to ask. Click here to see today's rates first of all. We see a few of the same questions the most, so we wanted to write a post about these mortgage FAQs. Here’s the answers to some of the most frequently asked home loan questions in Indy.
What is Private Mortgage Insurance for Indianapolis Mortgage Rates?
You’ll usually hear about private mortgage insurance when you’re going to buy a property with less than 20 percent down payment. You can avoid having to pay for PMI if you put down at least 20 percent or more on the mortgage at the beginning of the loan.
The reason for all of this is because if you’re putting less than 20 percent down, the lender wants some protection for if you can’t pay the loan. So the private mortgage insurance helps protect the lender in case the borrower defaults and does not pay back the loan.
All About Homeowners Insurance
Homeowners insurance is a good thing to have. What it does is pay anywhere from 20 percent up to 50 percent more than the face value of whatever policy you’re dealing with. What the idea is for homeowners insurance is that if your home has a fire or other sort of disastrous damage done to it, you can turn around and use the homeowners insurance payout money to get the damage fixed.
Why Do Rates Change All The Time?
The reason for interest rates changing at a frequent rate is because the market changes frequently, as well. Mortgage rates are set forth by the Federal Reserve, and they set them higher or lower depending on what the economy is doing at the current point in time. Their goal is to not crash the economy, or in positive terms, their goal is to stimulate the economy in the way most needed to keep it functioning properly and smoothly.
So rates change whenever the FED decides they want to raise or lower them. After the FED sets forth the prime lending rates, lenders across the country take their cues from the FED and adjust their particular rates accordingly.
Why is My Rate Different Than My Neighbor’s?
Another reason rates can change is because of you. Your certain financial situation, income, debt, past payment history, credit history, and more can have a huge impact on the interest rate that a lender decides to give you. If you have poor credit, for example, you are considered to be a higher risk to lend to. So because you are considered a higher risk, your interest rate will probably be higher. Or if your credit history and credit rating are bad enough, you may be denied a loan altogether.
What Happens if I Can’t Get Approved for a Mortgage?
There are usually lenders who will work with you. There are even loans known as Bad Credit Mortgage loans. These types of programs are set up to help people who either can’t afford to put down a large enough down payment for a loan, or simply cannot get approved for another type of loan because of their bad credit history.
One particular example of a Bad Credit Mortgage lender is actually the United States government. The Federal Housing Administration gives loans to people who cannot otherwise find approval from other lenders. The FHA will actually lend out money for home loans to people who have credit scores that are really low. If your credit rating is less than 600, other lenders usually will not work with you. But you can probably get an FHA loan.
Talk with your mortgage broker for more information!