Mortgage Interest Rates, Points,
Mortgage interest rates vary with the market so I won't talk numbers here,
just things you should be aware of. The best place to check the
going interest rate is at bankratemonitor.com. The low interest rates you
see at that site or anywhere else are for conforming loans. Non-conforming
interest rates are based on risk. The higher the risk the higher
I strongly recommend that when you get a mortgage you use a Mortgage Broker.
A broker can get you a better interest rate 98% of the time. Even
conventional rates vary dramatically from one lender to another.
Most brokers have access to dozens and dozens of lenders where a
Bank only has a few programs. Most Banks take only the best of the
best. The smallest flaw could be justification for being turned
down. A Broker having so many lenders will know exactly where your
loan will be approved. A broker will go the extra mile where a Bank
will usually walk you to the door.
You can lower your rate (and payment) with points.One point is equal
to 1% of the loan amount and paid to the lender at closing. With
many loans you can lower the rate by paying points. If you have
the cash it is a good way to save money on interest over the life
of the loan. Your decision should center on how long you intend
to be in the house.
Mortgage loans are more than interest rates and points. The APR
expresses the annual cost of a loan as a percentage. It factors
in not only the rate, but the points and other costs over the life
of the loan. It is intended to enable you to compare the costs of
a loan from one lender to another.
To make an accurate comparison, compare loans with the same terms,
rate, and points. Then look at the APR. The loan with the lowest
APR cost less.
Pre Payment Penalties
Always find out if there is a pre-payment penalty, how long it is
for, and how it is calculated. The main issue with a pre-payment
penalty is how soon you expect to refinance.
Also be ware of subsidized loans such as special bond programs or
farmers home loan programs that have a recapture clause. A recapture
clause means you have to pay back any subsidy or bond if you refinance
or sell your home. All loans are different so be sure to ask for
Locking Your Interest Rate
Locking or floating your interest rate should be discussed with
your loan officer but ultimately it should be your decision. Waiting
for rates to go down can be risky. You should consider do you have
a good rate now, are the payments where you want them, and are you
accomplishing your objective at the given rate (most important in