Mortgage Rates & You
If you’re looking at buying your first home you are going to become intimately familiar with the ups and downs of Mortgage Rates over the coming weeks and months. You may have heard the term bandied about the news and by neighbors and friends who are buying or refinancing homes. While you don’t need to become an expert in mortgage financing or law, you do want to get a good grasp of the basics.
In order to buy a home you’re going to need to get a mortgage loan. This is a specialized loan that uses the property you are buying as collateral. There are federal and state laws that govern mortgages, including who can originate or broker a loan as well as which lenders are authorized to sell mortgages in a given state. As long as you deal with a licensed real estate agent and a licensed broker, you should be in good hands.
Mortgage loans are based on two figures. The first is the loan amount and the second is the interest rate for the specific loan. The loan amount is determined by subtracting the down payment from the purchase price of the property. Additional fees such as closing costs , insurances, and taxes may be added into the loan. The interest rate or mortgage rate is going to be determined by your financial situation and credit history. The better your overall credit rating, the lower the interest rate on your mortgage will be.
A fixed rate mortgage is going to have the same interest rate for the entire life of the loan. An adjustable rate mortgage (ARM) is going to fluctuate depending on current mortgage rates. You need to watch mortgage rates carefully to make sure that you lock in the best rate for your mortgage as even a half percent increase in the interest rate can raise the monthly payment on a $150,000 loan by as much as $50.