If you choose to use mortgage loans when buying something, it is important to know what are the mortgage rates for today. Thus, you can make the best decision with minimum risk.
About Mortgage Rates
So, what is a mortgage rate? When you decide to buy a property with a mortgage loan system, you need to pay off your loan with the addition of interest.
Generally, there are two types of mortgage rates, fixed and variable. But, there are more specific types that we will further discuss below.
Mortgage Interest Rates Products
There is a wide variety of mortgage interest rates products. Amongst them are:
Fixed-Rate Mortgage (FRM)
The definition actually right there in the name. If you use FRM, then you will pay fixed, same interest rates over the loan period. There are 30, 20, and 15 years FRM that indicate how long you will pay for the loan plus interest.
With an FHA loan, the borrower should pay a 1.75 percent (of the loan amount) upfront mortgage insurance premium. This mortgage is insured by the U.S. Department of Veteran Affairs.
VA loan is similar to FHA, but instead 1.75%, you need to pay 1.25%-3.33% upfront mortgage insurance premium.
ARM (Adjustable-Rate Mortgage)
Adjustable means variable. Expressed by two numbers while the first number indicates the fixed-rate following by the second number, that is the adjusted rate.
For instance, there are 5/1 ARM, 7/1 ARM, and 10/1 ARM. Let’s take a look at 5/1 ARM. In this case, you will pay the fixed rate for five years, subsequently a variable rate that will be adjusted every year.
Fixed-Rate Jumbo and ARM Jumbo
You have understood about FRM and ARM, but there is an additional word right here, jumbo. What does that mean? Jumbo Mortgage amount exceeds the limit sets by government-sponsored enterprises.
Each day, those above products have a different percentage, so it is important to always search for mortgage rates for today before you’re agreeing to any products.
Interest Rate VS APR (Annual Percentage Rate)
In fact, those two terms are slightly different. While interest rates only include the cost of borrowing the loan, APR consists of interest rates plus other costs (broker fees or closing costs).
If you use APR system, it is crucial to ask what costs are included in the rates as different lenders might have different criteria.
How Do I Find The Best Mortgage Rates?
If you want to find the best mortgage rates, the first thing you should do is to improve your credit score. When you have a higher score, you can get better mortgage offers like lessen interest rates and other benefits. In addition, you can also pay higher down payment (DP) and get less interest rates over the life of the loan.
As having a high credit score is very important to find the best mortgage rates for today, you should know what is your credit score and how to calculate it. Worry not, read the full explanation about credit score now!