If you are planning to buy a home, it can get very confusing to look at mortgage rates online. The best way to get a good rate is to talk to real lenders, and this your real estate agent can help you with. First, you will need to decide which loan programs you are going to compare. Your options are between a fixed rate, an adjustable rate mortgage (ARM) and a hybrid. A fixed rate is fixed throughout the life of the loan, an ARM has an interest rate that can vary throughout the life of the loan and a hybrid is an ARM that is fixed for a predetermined period then adjusts into an ARM.
These days, with interest rates at almost historical lows, most people would select a fixed rate. However, what kind of rate you ultimately decide to go with will depend on how long you plan on living in your home. If you think that there’s a good chance of you selling it again within five years, an adjustable rate might be more suited to you. But if you plan on staying in the home long-term, you would probably be better off with a fixed rate loan.
Once you’ve decided on what kind of rate to go with, you will also need to select an amortization period, also known as the loan term. The most common fixed rate term is 30 years, but you can also opt for a 15, 20 or 25-year term. The shorter the term, the lower the interest rate, but bear in mind that this will also mean that your monthly payments will be higher. If you currently have low debt, or you are planning to buy a home that is well within your means, you may opt to go with a shorter term so that you can build equity faster.
Once you’ve figured these out, you will be ready to compare different loan rates. Shop around for lenders, and be sure to get referrals from your friends, family and real estate agent. Give each lender the same facts: what kind of loan you want, the term, how much you want to put down toward the purchase price, and your credit score. This is so that you can get pre approved and ultimately decide which lender can give you the best rate.
If you are planning to buy a home, let The Incorvaia Team make the process as easy as possible for you. Call us at 440-879-7130 today!
