Do you know that the rocket mortgage interest rate can be reduced to enable you to enjoy a low-interest rate? Find out how you can calculate the loan interest and how to reduce it too.
Believe me, there is no one who loves any loan company that has a high-interest rate. No one does. Although, we all pray to avoid high interest when applying for a loan but we still don’t get it.
Okay! Don’t be worried anymore, we got you covered. This article will help you discover the factors that lead to high-interest rates when you apply for any loan and how to avoid it. So before you apply for that Rocket mortgage loan online, have you checked the Rocket Mortgage interest rate? Does it suit your pocket? Can you repay it?.
What is the Rocket Mortgage Interest Rate?
An interest rate on a loan is that specific percentage charged by the lender on the principal amount for the loan given to you. The interest rate is usually payable every month. Thus, when we talk about the interest rate, you should regard it simply as the percentage you pay for the loan given to you every month.
ILLUSTRATION
So let’s say you intend to get a loan of $1M from Rocket mortgage to finance your home or buy a car. The sum of $1M is the principal amount. Then the interest rate for that principal amount could be 1% which is not really possible though.
So you should do the mathematics. 1% of $1M monthly is $100. Thus it means that for every month you are paying Rocket Mortgage $100 for the $1M loan that was approved until the principal amount is repaid.
A higher interest rate will be charged when the possibility of you repaying the loan is low.
How is the current Rocket Mortgage Rate Calculated?
Now that you fully understand what the rocket mortgage interest rate is all about, do you know how the rate is calculated? It is very important that you calculate the interest rate for loans. This will suggest to you how much you pay monthly as against the Annual percentage Rate (APR).
Read More: Rocket Mortgage Login: Quicken Loans Account Sign in
There are several factors that determine how Rocket mortgage calculates its interest rate for loan applications. It is important to note that the rates are always flexible. So it changes at anytime.
The rates are calculated based on ASSUMPTIONS which are the set of details you provide for them when you make the application. The assumptions include the following details;
- A loan amount.
- Points are paid at closing to get a lower interest rate.
- You’re buying or refinancing a single-family home that’s your primary residence.
- If refinancing, you’re not taking cash out.
- Closing costs will be paid upfront (not rolled into the loan).
- Debt-to-income ratio.
- Credit score.
The rates you get depend on how close your details are to the assumptions. Rates and assumptions are subject to change and differ from lender to lender. So it is important that you check rocket mortgage assumptions when you are comparing interest rates.
How to reduce your Rocket Mortgage Loan Rate
If you are interested in applying for a rocket mortgage loan or with any other lender, it is important that you use this method to reduce the interest rate payment due for the loan.
- Make more payments when due monthly: When you are due to make your payment for the interest rate, you should also make extra payments upfront. This helps you to make the payment faster. So, using our illustration above, instead of you paying $100 monthly, you can decide to pay above that. It reduces the interest you pay on the loan
- Reduce the Loan repayment Term: When you choose a shorter loan term, it means a lesser risk for the lender and a lower interest rate for you. Short-term loan repayment means you will pay higher interest for a short period of time. Although it may be difficult to repay the loan in a shorter term, it comes with financial benefits and helps reduce your interest rate and increase your credit score.
- Always make your Repayment on Time: Most lenders like Rocket mortgage offer you a great interest rate reduction if only you can make your repayment on time depending on the time frame provided.
Should I choose a High or low-interest Rate for Loans?
Sometimes it seems a good idea when you go with a low-interest rate loan because of how much interest you have to pay until the loan is fully repaid. However, they are situations when going with the lowest available rates is not a good financial step to take.
Paying points is a good example. A point is the money you pay upfront to get a lower interest rate on a mortgage. Say you don’t have a lot of money saved to buy a home. You may prefer to use your funds toward a down payment to get the home you want instead of a lower interest rate.
What’s more important than just the lowest interest rate is getting the right mortgage for your situation – and a lender who helps you do that.
Can my Credit Score Affect My Rocket Mortgage Interest Rate?
Yes! credit scores usually have a great impact on your interest rate. The lower your credit score, the higher your interest rate to be paid. This applies to all kinds of loans all over the world. Unfortunately, the lower your credit score, the more likely it is your interest rate will be higher. That applies to all kinds of credit, not just mortgages.
Credit scores show the level of your creditworthiness to get a loan. Most lenders demand that you get at least a 300-850 credit score to be qualified for a loan.
Visit here to check your credit score to determine your rocket mortgage interest rate. see your TransUnion® Credit Report and get your VantageScore 3.0® credit score.
Difference Between Interest Rate and APR
The interest rate is the percentage you pay to borrow money from a lender for a specific period of time.
The APR, or annual percentage rate, includes your interest rate plus additional fees and expenses associated with taking out your loan.
Rocket Mortgage Current Rate Today
Like we said earlier, rocket mortgage interest is not static. When the assumptions change, the interest rate changes. However, to determine the current interest rate of rocket mortgage today simply visit their official homepage.
Below is a snapshot of the Rocket mortgage current rate today as at the time of writing this article
If you are satisfied with rocket mortgage, you can check out our article on how to apply and login into your rocket mortgage account online.
Conclusion
That is all you need to know for your rocket mortgage interest rate. Follow the guidelines, calculate your rate, and decide whether you are comfortable with a higher or lower rate.