3 Factors That Influence Mortgage Rates

November 22, 2024
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Navigating mortgage rates can feel like an overwhelming task. Mortgage companies aren’t always upfront about closing costs and lender fees, and rates can fluctuate frequently—sometimes even within a day. The reality is that several factors determine the interest rate you're offered, and understanding them can be tricky. Here are three major factors that influence your mortgage rate:

1. Your Credit Score and Financial Health

Your credit score and overall financial situation are among the most significant factors in securing a competitive mortgage rate. The underwriting process may feel stressful, but it’s how lenders assess the risk of lending you a large sum of money for a home purchase.
The stronger your credit and financial standing, the more likely you are to receive a lower rate, potentially saving you thousands over the life of the loan. Therefore, it’s worth taking the time to improve your credit and get your finances in order before applying.
Some factors that will be reviewed during underwriting include:

  • Debt-to-income ratio
  • Average of your credit scores from the three major bureaus
  • Any negative marks on your credit report
  • Job history, such as length of employment, industry stability, and employment gaps
  • Self-employed? Your last two years’ tax returns will be used to assess income

2. Details of Your Home Purchase

Lenders assess the specifics of the property you're buying to determine your rate, as these details help them evaluate the risk of the loan. They won’t finalize your loan until they fully understand the value of the home and any potential risks tied to it. Key details your lender will consider include:

  • Location
  • Home price and condition
  • Property type (primary residence, secondary home, single-family, multi-family, etc.)
  • Loan amount
  • Down payment (higher down payments typically lead to lower rates)
  • Sales contract details, such as earnest money and contingencies

Understanding how your home’s specifics can affect your rate is essential. Be sure to discuss these with your lender to get a clear picture of how they impact your mortgage.

3. Technical Loan Details (Terms, Points, and Fees)

The finer details of your loan also play a key role in determining your interest rate, including:

  • Closing costs and lender fees
  • Fixed vs. adjustable-rate mortgages
  • Balloon payments
  • Upfront points and fees
  • Loan term (the length of time you have to repay the loan—rates vary between a 30-year vs. a 15-year mortgage)
  • Type of loan (conventional loans vs. government-backed loans like FHA, VA, or USDA)

As a homebuyer, it's crucial to understand these elements and seek clarification if anything is unclear. A reputable lender should be transparent, taking the time to explain all aspects of your loan and interest rate while providing educational resources to guide you through the process.

Beth Dickerson

Beth Dickerson

Boston, MA

About The Author

One of Boston’s most reputable real estate brokers, Beth Dickerson has achieved more than $2 billion in sales and thousands of successful real estate transactions over her nearly thirty-year tenure. Beth has received national acclaim from the real estate industry and represents some of the most prestigious residents and properties across Massachusetts. Her enduring record as a top producer comes from the intuitive gift of sensing her clients’ needs. She has built a business that is referral-based at its core—a testament to her relationship-driven approach and penchant for exceeding expectations. It is this nuanced expertise that Beth leverages to guide many of her clients-turned-friends through some of the greatest milestones of their lives.


Beth was the proprietor of her own real estate company before joining the residential division of R. M. Bradley in 1993, where she was a top producer for more than a decade.  In 2003, she founded her own boutique real estate firm, Dickerson Real Estate, before merging with Gibson Sotheby’s International Realty in 2007. Today, Beth attributes her success to her comprehensive marketing and advertising strategies, exclusive contact network, and unparalleled insight into neighborhoods like Back Bay, Beacon Hill, the South End and Waterfront. With an understanding that no two clients are alike, she works with clients in all phases of life—from first-time buyers to luxury developers, seasoned sellers and beyond. Beth offers clients the resources to aggressively market their property locally, nationally and globally, and her attention to detail, drive and enthusiasm are unmatched.


Beth has appeared in prestigious media outlets including The Wall Street Journal, Mansion Global, The Boston Globe, and Boston magazine, and was prominently featured as Greater Boston’s real estate expert on WCVB Chronicle in 2020. She has had the honor of serving as President of the Downtown Council of the Greater Boston Real Estate Board. For over ten years, she has been a Co-Chair and Committee Member for the Massachusetts General Pediatric Hospital for Children’s Storybook Ball. She serves as a Board Member of the Community Music Center of Boston and a member for the Perkins School for the Blind, Emerald Necklace Park Conservancy, Justine Liff Luncheon, Youth Villages and the Boys & Girls Club of Boston, among dozens of other organizations throughout the Boston area.

A long-time resident of Boston’s Back Bay, Beth was an active member of the community as she raised her two children: she served as treasurer of the Clarendon Street Playground and was an avid supporter of the Hill House Community Center.