Mortgage rates have
recently been at an all-time low, putting home ownership
within the reach of more people than ever. With thousands
of first-time homebuyers on the market, shopping for
great mortgage interest rates has never been as popular
or as easy.
With the mortgage lending industry becoming increasingly
competitive, don’t be afraid to shop aggressively.
Shopping for a mortgage interest rate is like shopping
for any other product—the types of mortgages available
to you are incredibly diverse. As with any other major
purchase, you should strive to find the one that is
the most fitting for your specific circumstances. Start
with deciding what type of mortgage rate and payment
schedule fits your situation best.
The two most basic types of mortgages are adjustable
and fixed mortgages. Adjustable rate loans, also known
as variable-rate loans, have interest rates that fluctuate
over the life of the loan. The rate fluctuations are
based on market conditions, though most adjustable rate
loans come with loan agreements that specify maximum
and minimum rates. When market conditions cause rates
to rise, so do your loan payments. When interest rates
fall, your payments are also generally lower. One of
the major perks of adjustable rate loans is that they
usually offer a lower initial interest rate than fixed
rate loans.
Fixed rate loans have interest rates that stay the
same during the life of the loan. The monthly payments
also stay the same. To get a fixed rate loan, you must
decide how much you can pay each month, and then choose
your terms. Most terms are for 15, 20, 25, or 30 years.
The traditional 30-year fixed rate mortgage remains
popular because it allows homeowners to make affordable
monthly payments. A 15 year mortgage is enticing because
it allows you to own your house outright in just about
half the time. However, a 15 year mortgage also requires
you to make high monthly payments, making this mortgage
option unaffordable for many homeowners.
Once you have a clear idea of what kind of mortgage
is best suited for you, it’s time to start shopping
for the very best rates. Start by tracking current interest
rates to get an idea of current market trends. Interest
rates are forever fluctuating, but learning about their
recent movement will allow you to shop with confidence.
You can begin to shop for good mortgage rates in your
very own neighborhood. Your local bank or credit union
is a great starting point. These financial institutions
are known for offering existing customers attractive
terms on mortgage loans. Make an appointment with a
loan officer to discuss your situation and to learn
more about viable mortgage options.
Another option is to contact a mortgage broker. Mortgage
brokers work as an intermediary between prospective
homebuyers and lending institutions. A mortgage broker
has access to the rates offered by many lenders. Within
minutes, a broker can provide you with a quick comparison
of rates. Sometimes it’s difficult to know if
you’re dealing with a broker or a lending institution.
If you’re not sure, don’t hesitate to ask.
One of the easiest ways to search for great mortgage
interest rates is by logging onto one of several websites
that specialize in comparing mortgage rate quotes. Many
of these sites charge small nominal fees for their services,
although many more will allow you a limited number of
free searches. This option is well worth exploring:
online lenders offer competitive rates, and you’ll
be able to compare the quotes of several leading lenders
in a matter of minutes.
If you think you’ve found a great mortgage interest
rate that seems too good to be true, it just may well
be. Go over the terms carefully, and inspect any mortgage
costs that you don’t fully understand. Lenders
often have different names for the same cost, so don’t
be afraid to questions. You should also be wary of points.
Points are finance charges (one point is 1 percent of
your mortgage balance) that are often added to the total
amount of the loan. They usually have little bearing
on your monthly payments, but do end up costing you
in the long run. As you fill out your mortgage application,
make sure you lock in your rate.
MT |
