3 Replies to “What is meant by higher interest rate in real estate and housing loans?”

  1. Higher interest rates mean that for a housing loan that you get from the banks you will have to pay a higher interest rate than the existing rate.
    This is applicable for the floating interest loans on housing and real estate


  2. interest rate are increased,for example for a loan of 10lakhs if previously interest was 10.5% now it would be increased by say 2% means new interest rate becomes 12.5%


  3. Interest rate is the % of the loan amount the lender charges you to use their $.

    Lenders charge different interest rates based on the RISK of LOSING their MONEY they feel the borrower is.

    Risk factors are:
    1) % of your own $ into the house (down payment) More $ down = LOW LTV = less risk = lower rate
    2) Credit score. lower score = higher risk = higher rate
    3) % of your income above the payments you have to make = DTI. Lower DTI = lower risk = lower rate
    4) $ in the bank = assets. Lots of assets = lower risk = lower rate
    … and so on.

    The main residential lenders in the US are: FNMA, FHLMC, FHA. These companies have websites who’s underwriting engines (a risk algorithm) must give you an approval after putting in a LOT of information. Your credit, assets, income and the house MUST CONFORM to their guidelines.

    If not, they won’t lend you $ at their cheap rates and high LTV.

    To get access to these qualifying engines, get with a mortgage professional who will take an application, pull your credit, look at your paystubs/W-2s to see how well you conform to their guidelines and how much house you can buy.

    Best of luck!





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