Philadelphia Mortgage

What Are Philadelphia Mortgage Rates Based On?

Philadelphia mortgages are a mystery to those who have never applied for a mortgage loan. The most asked question:

What are Philadelphia mortgage loan interest rates based on?

Technically, a number of factors can influence a Philadelphia mortgage loan interest rate. However, the two factors that have the greatest impact are a mortgage loan applicant's credit standing and the prime interest rate.

Credit Standing

Credit standing, sometimes called credit rating or credit worthiness, is a reflection of how you have handled the debts you've accrued with creditors in the past. If you have lines of credit with multiple lenders and you have made regular payments to those creditors based on the terms and amounts promised, you will have a good credit rating. Today, a "good" credit rating is considered a credit score of 680+. If you have established credit lines with lenders and haven't paid, your credit rating will be poor and your credit score will be less than 550.

Prime Rate

The prime rate is the interest rate that is the basis for all mortgage loan interest rates. It's determined by the banking industry and is based on the interest rate banks charge corporations for borrowing money. If you hear news of the prime rate dipping, expect Philadelphia mortgage loan interest rates to fall; if you hear about a prime rate increase, mortgages rates across Philadelphia may also increase.

Putting It All Together

The general rule of thumb is that those with "good credit" qualify for the lowest Philadelphia mortgage interest rates available; those with "bad credit" pay higher interest rates. And, since the prime rate is set independently of an individual's credit rating, the interest rate one qualifies for is equal to the prime rate plus the rate the individual is eligible for based on their credit rating. Got it? Good!