5 elements of a great mortgage rate

Homebuyers and homeowners who want to refinance are understandably eager to get the lowest possible mortgage rate they can.

That's not always easy, in part because the best mortgage rate offered to one borrower might not be the same as the best mortgage rate offered to another borrower.

So, what factors will lenders consider when they decide what mortgage rate to offer to you?

Here's a sampling:

Your credit score. Lenders use your credit score to evaluate how well -- or how poorly -- you've handled other loans and financial obligations such as credit cards. If your credit score is high, you'll be offered a lower, more attractive mortgage rate because the lender will be more willing to lend money to you.

Whether you intend to live in the house. If you buy a home that you want to occupy as your main residence, you'll be offered what's known as an "owner-occupant" mortgage rate. If you want to buy a home as an investment property that you will rent out to tenants, you'll usually have to pay a higher mortgage interest rate.

Where you live. Borrowers are often surprised to discover that mortgage rates differ across the country. If you live in a state where mortgage interest rates are lower, you may be offered a lower home mortgage rate, too.

Whether you're willing to pay points. If you're willing to pay more money upfront to get a lower mortgage rate, ask your loan officer about paying points. One point is equal to 1 percent of the loan amount, but paying even a quarter-point or half-point could help you get a lower mortgage rate.

How much you want to borrow. If you want to borrow a large amount of money, defined as more than the "conforming loan limit" in your area, you'll have to get a jumbo loan, which typically will have a higher mortgage rate. If you live in a high-cost housing market or want to purchase an expensive residence, ask your loan officer for more information about loan limits and rates on jumbo mortgages.

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