Mortgages can be confusing. There’s no doubt about that, and many of us are simply too busy to invest much time in understanding mortgages. That’s why we’ve compiled this quick guide to mortgages to help you understand what up to date mortgage rates mean to you and what to expect from mortgage companies.
Adjustable or Fixed?
The two basic types of mortgages are adjustable rate, or ARM, or fixed rate mortgages. The ARM is a loan with a variable interest rate. This rate will change throughout the life the loan, going up when rates are up and down when they go down.
Knowing up to date mortgage rates is crucial if you have an ARM. If you time things well, you can enjoy fantastically low rates. But if the current mortgage rates are high, you could end up spending a lot more than your fixed rate mortgage brethren.
A fixed rate mortgage is usually for 15 or 30 years, and the rates are fixed. The upside to this is that your payments are always the same and there are no surprises. The downside is that if up to date mortgage rates plummet, you can’t easily take advantage without refinancing.
Finding the Right Rate
To get the best rates, you’ll want to consider up to date mortgage rates at the time you seek a loan, your own credit score, and the amount of down payment you’re able to put down. When you know this, you can go to mortgage lenders with some confidence. You’ll get the best rates if you do the following:
- Work on your credit score. The higher your credit score, the more likely you are to get good rates. You’ll be seen as a responsible and reliable person, and lenders will be more interested in renting to you and giving you good terms. If you can do some things to improve your score before you go hunting, do so.
- Improve your down payment. The more you can put down initially, the more favorable your terms will be. In fact, if you can put down enough you won’t even have to buy mortgage insurance.
- Think about the long game. How long do you want to be in the home you’re buying. If up to date mortgage rates are low and you’re only planning to be in the home a few years, then getting an ARM can be a really smart move. On the other hand, if rates are high or if you want to spend the rest of your life in your dream home, a fixed rate mortgage can be a safer bet.
What should you look for in a lender? Start by looking at ratings from J.D. Power and Associates, looking at online reviews, comparing rates and offerings, and even talking to family and friends to get recommendations.
Once you have a short list, go and talk directly to potential lenders. Note how they treat you, how well you’re able to communicate, and what they can offer given your down payment, credit score, and home choice. Don’t be afraid to shop around.
Getting a mortgage is daunting, but Americans do it every day. It just takes a bit of planning to make a good decision; then you’ll be enjoying your home for years to come.