What factor can significantly impact a borrower's mortgage interest rate?

The borrower's credit score is a crucial factor that significantly impacts the interest rate offered on a mortgage. Lenders use the credit score as a key indicator of a borrower's financial behavior and reliability in repaying debts. A higher credit score typically indicates a lower risk to lenders, leading to more favorable interest rates. For example, borrowers with excellent credit scores are often rewarded with lower rates, which can substantially reduce the total cost of the loan over time.

While other factors like loan term length, down payment amount, and property location do influence interest rates, credit score is one of the primary determinants. A lower credit score can result in higher interest rates, reflecting the increased risk perceived by lenders. Therefore, maintaining a good credit score can be critical for borrowers looking to secure the best possible mortgage rates.