Lowering your interest rate by even a fraction of a percent can save you thousands of dollars over the lifespan of your real estate loan. It’s really not all that surprising, then, to learn that people will go to extreme lengths to ensure that they receive the best interest rate possible for whatever deal they’re currently negotiating.
Ultimately, money is money – and the more you know about interest rates, the more money you’ll save. Here are three major factors that affect your interest rate when you apply for a real estate loan.
Very few people are surprised to learn that their credit score almost always affects the type of interest rate they’re eligible for. However, unlike traditional lenders who put the bulk of their decision behind a person’s credit score, at Gravity Capital we view credit scores a little bit more objectively. Your credit score is certainly an important factor to consider while calculating your interest rate; however, it’s not the only definitive factor we look at.
Many of our most successful borrowers are people with low or abysmal credit; they have the type of credit that makes them ineligible for a real estate loan with traditional lenders. We know every situation is unique, and we never base the bulk of our decision off of a prospective borrower’s credit score. We definitely take it into consideration, but it plays a much lessor role than it would with traditional lenders.
As a general rule of thumb, real estate loans with shorter term lengths have lower interest rates (albeit higher monthly payments). Obviously, loans that aren’t paid on time accrue rollover fees and run the possibility of inviting higher interest rates. Ultimately, however, the length and terms of your loan will directly influence your interest rate – whether that means higher or lower.
What does location have to do with the interest rate on a real estate loan? Quite a bit. Because every state has different laws, your location will play a key role in how much interest you can be charged for a real estate loan. Some states enforce a uniform law for all loan types – which means that both traditional and alternative lenders are affected. States such as Utah, however, do not have an interest rate ceiling and rates are determined by the market.
At Gravity Capital, we strive to provide competitive interest rates for borrowers who don’t meet the traditional requirements for real estate loan funding. To learn more about what interest rates we offer or how Gravity Capital can finance your next business opportunity, contact us today.
