How to Find Low Mortgage Rates

2007-10-15 12:53:47

( Financial )



Mortgage Rates - The Biggest Concern in Loans

The cost of borrowing is ultimately dependent upon the mortgage loan interest rate. Mortgage rates are the bases for calculating your periodical amortizations. Interest charges are applied first to your amortization, then to the principal balance. The higher the mortgage rates are, the lower will be the amount applied to your outstanding loan balance.

As a borrower, your goal is not just to pay your mortgage, but also to gain equity of your property, which is based upon the amount of principal you have already paid. Your home equity can be used to apply for new loans for education and other purposes. You want your mortgage loan interest rates to be as low as possible, in order to gain more equity sooner.

Traditional Ways to Find Low Mortgage Rates

You can inquire with local financial institutions about their loan offers. However, this is a tedious task as mortgage rates tend to vary almost every day.

You can also look up loan rates that banks and other lenders publish in your local newspaper or community bulletin. This method is just as unreliable because of the high degree of changeability of loan rates.

Internet Sources for Low Mortgage Rates

Through the net, you can find low mortgage rates quickly and easily. Hundreds of websites publish loan rates regularly, and update them accordingly as they change.

Online sites also classify mortgage rates as fixed, variable or jumbo mortgage rate. As a rule of thumb, fixed rates are generally higher than variable rates.

If you want to be more precise, you can try using the built-in mortgage calculator found in many websites to determine your exact amortization payment, given the loan amount, mortgage period and interest rate.

Occasionally, some lenders may give special promotional low mortgage rates to attract more loan business. Some of the promotions may include very low initial mortgage rates or even interest-free repayment periods.

Other Factors Determining Low Mortgage Rates

Not all borrowers are qualified for low mortgage rates, except those with clean and above-average credit ratings.

The type of loan and repayment schedule will also determine the mortgage rate. Some loans may have low mortgage rates but also higher transaction fees or points, or may require balloon payments. Loans from government agencies or through employers may also charge low mortgage rates compared to traditional bank loans.

You need to be prudent about choosing the right loan package and not just rely on low mortgage rates as the sole basis. Shop around first to find out all your available options, and be wary of any other hidden costs or tough loan terms that may just offset the low mortgage rate.


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