Understanding Mortgage Rates
Mortgage rates refer to the interest rate that is part of your monthly mortgage payment. It is what you pay in return for borrowing the money from a bank, financial institution, or mortgage company that you need to purchase a home.
Generally, mortgage companies use a daily rate average to calculate mortgage rates. These figures are tied to movements in the stock market and the overall interest rate market. Mortgage rates will vary based on a number of factors, such as the type of loan product, the loan amount, and your credit score.
Doing Your Homework on Mortgage Rates
When it comes to mortgage rates, the best advice is to do your homework and shop around. Mortgage companies want your business, so make them work. Here are some valuable tips:
- Use the Internet because it has a wealth of information about mortgage rates, including trends, key economic data, and other factors that influence if rates rise or fall.
- Be aware that mortgage companies must disclose the Annual Percentage Rate (APR), which shows the true cost of the loan and prevents hidden fees and misrepresentation in advertising.
- Lock in your mortgage rate, which makes the mortgage company promise to use a certain interest rate during the time your application and loan are being processed.
- Do not be afraid to use negotiation skills as if you were buying a car. If a lender thinks you may select another company, they may offer better mortgage rates. Remember, don’t ask, don’t get!
April 24, 2006