There are two main factors that determine your interest rate. The current market rates, and the risk that the lender faces. While you have no control over these factors, you can influence how your lender views you. A better credit score and fewer red flags on your credit report will give the lender confidence that you are a responsible borrower. A lower debt-to-income ratio also indicates that you have more money available to pay the mortgage. This means a lower interest rate for you.
Your monthly mortgage payment will include a small amount of interest and the principal of your loan. Your mortgage provider will pass this money on to investors in your loan. Your monthly payment will likely include property taxes and homeowners insurance. In some cases, your lender will hold your money in an escrow account and pay these bills when they become due. The monthly payment is the largest portion of your total mortgage payment. If you are a first-time homeowner, you may not be able to afford the monthly payment.
