Category: mortgage

When you are in the market for a new home, one of the most complicated aspects of the purchase may be choosing a financing vehicle for your property. Mortgage loans have become quite diverse in recent years in an attempt to accommodate every financial need and housing purchase. One loan package that has become rather popular is the adjustable rate mortgage. These loans generally start out with an enticingly low interest rate that will rise and fall with market trends. But the adjustable rate mortgage isn’t the best choice for everyone. Read on for tips on choosing the right mortgage product for your needs.

Advantages
There are a number of advantages to the adjustable rate mortgage. As we have already mentioned, the introductory interest rate is usually much lower than what is offered for a traditional 30 year mortgage rate. However, that low rate can change periodically, usually based on the rise and fall of a 1-year US Treasury Bill or another similar benchmark. If it appears that rates are in a dropping mode, an adjustable rate mortgage might be the way to go.

This is also a good choice if you will be needing extra cash during the first year of the loan for home improvements or landscaping. However, going into debt during this time will cause a significant problem if your monthly payments end up rising before your balance is paid in full. Some homeowners will also opt for an adjustable rate mortgage if they are not staying in the house long, since the rates won’t have time to max out during a shorter term. You can also begin with an adjustable rate mortgage and then refinance as the rate begins to rise. However, keep in mind that refinancing will be done at the current market rate, which may be higher or lower than your original rate.

Disadvantages
The adjustable rate mortgage isn’t the right choice for everyone. It should not be used to get into a more expensive house than you can afford, since a rise in rates may make the home too expensive much quicker than you’d like. It is also important to understand the terms of the loan thoroughly, such as how often the interest rate can fluctuate and what the caps on those fluctuations might be. Many people are unpleasantly surprised by how much their monthly payments can go up with the rate fluctuations, so make sure you are prepared for any additional mortgage expense that might arise.

The adjustable rate mortgage isn’t right for everyone, but it can be a savvy financial choice for some. If an adjustable rate mortgage sounds like the right loan product for you, talk to a loan officer about the ins and outs of the loans they offer and make sure you understand the terms perfectly before you sign on the dotted line.

When you are in the market for a new home or looking to lower the payments on a current property, a new mortgage loan will be the logical course of action. However, there are many finance companies that will be vying for your business, offering you the best mortgage interest rate and the most affordable terms. Before you jump into the lending pool, it helps to have a few basics under your belt so that the entire process goes more smoothly.

Rates are Competitive
A mortgage company may advertise a particular mortgage interest rate for a fixed loan or an adjustable rate mortgage, but this may be negotiable based on the type of credit history you have and the amount of points you are willing to pay. To ensure you receive the best mortgage interest rate possible, it is a good idea to know what current market rates are for your area. You can easily find this information by surfing the Internet for the many websites that provide this comparison shopping in one easy click. To ensure you are comparing apples with apples, make sure you are looking at points and fees as well as the mortgage interest rate. Once you have found a good deal, you are ready to bargain with any lender who is willing to match the best mortgage interest rate you could find.

Fees are Negotiable
Fees are an unfortunate part of the lending process, but sometimes these figures are up for discussion just like the mortgage interest rate. While banks may not be able to do much to discount set fees for services like an appraisal or filing the necessary paperwork, points are an additional cost that companies often can be flexible with. In many cases, the points are directly connected to the mortgage interest rate, so when the rate goes lower the points go higher. This is why some lenders refer to “buying down” a mortgage interest rate. However, if you find one lender offering a particular rate with no points, it is fair to mention that fact to another lender who is offering the same rate with a few points tacked on. You never know when you might get those points deducted to your advantage.

More Money is Unnecessary
When you are requesting a mortgage interest rate for a refinance of an existing loan, many lenders will ask if you want to borrow additional funds for purchases like home improvements or a family vacation. Your best negotiating powers work when you don’t take any additional money out, but merely put the loan back into your property. So forget the extra cash you will just raise your monthly payment over a 30-year haul anyway.

Finding the best mortgage interest rate is easy once you have the basics of how the lending process works. Shop around and don t be afraid to ask lenders to go lower on their rates or fees to give you the best deal possible. You just might be pleasantly surprised at the loan terms you get.