the way the economy has been over the last little while, you may find that mortgage rates have stayed near
historic lows for quite some time now. The mortgage rates are one
of the most important things to consider when you are thinking about getting a home loan or a mortgage
refinance. Rates will be different if you have excellent credit and
can get a traditional loan than if you have poor credit and must get a bad credit mortgage loan. Understanding more about mortgage rates will help you when you are ready to
take out that mortgage loan.
Basically, the mortgage
rates fairly simple to understand. Your mortgage rate is the
interest rate on the amount you are borrowing. The rate is applied
to the total amount and is amortized over the life of the loan, or the loan term. The lower the interest rate you are being charged, the lower your monthly
payments will be and the less interest you will pay overall during the life of the loan.
ARM mortgages use an
adjustable rate where the initial low rate is set for a period of time and then it adjusts based on market
indices that the rate is tied to. With this type of a loan it can
be a little bit difficult to know in advance the amount of interest you will pay over the life of the loan
because you never know what the rate will adjust to or how often it will actually change over
time. With a fixed rate mortgage, you will have an amortization
schedule that will lay it out for you in black and white.
Whether you are purchasing a home or doing mortgage refinancing, the type of loan product you choose will
impact how the mortgage rates affect you.
In order to get a better
feel for how the interest rates will work for the loan product you have selected, you are legally entitled to
receive a Good Faith Estimate from your lender. While it is just an
estimate, it is a very close estimate that will show you all of the costs of the loan, including the way the
mortgage rates will affect the amount of interest you will be paying. When you are comparing lenders, this is an important form that will help you
know when you are getting a good deal. It is also helpful to know
that when you hear about advertised rates, the only one that is important to you is the APR. This takes into account the closing costs and is adjusted