With the economy the way it is, many people are apprehensive about taking on the huge debt associated with buying a home. In response to this the Federal Reserve has cut the interest rates to boost the economy. In response, people are now coming forth to search for the best mortgage rates they can find. The interest rates are lower than they have been in years; therefore, now is the perfect time to purchase a home.
There are many things to consider when you are in the market to buy a home. With the cost of food and gasoline being sky high, can you take on a mortgage payment? A good rule of thumb is that your monthly mortgage payment should not exceed your weekly salary. Another way to put it is that your monthly payment should not exceed one quarter of your monthly income.
Finding a lender with the best mortgage rates is as important as finding the perfect house to buy. You can search the internet for lending institutions and apply online, or you can hire a mortgage broker to do the work for you. A mortgage broker is the middle-man that brings the lender and borrower together. Whether you have perfect or less than perfect credit the mortgage broker can find you a lender with the best mortgage rates for which you qualify. It may not always be necessary to use a mortgage broker, but if you are having trouble qualifying for the best mortgage rates you may want to hire a broker.
Qualifying for the best mortgage rates can be difficult if your credit history is less than perfect. If you can wait to buy for 6 months to a year use that time to improve your credit rating. Be sure to pay your bills on time, and if you have any outstanding credit card balances get them paid off, clean up any debt that has gone into collections that has been reported to the credit bureau. Then check periodically with the credit bureau to verify that your credit rating is improving. By boosting your credit score you may be able to qualify for the best mortgage rates from your lender.
Qualifying for a loan with the best interest rates may depend on your credibility. Saving 20 percent for a down payment for a home shows the lender that you can afford to take out a mortgage, and you can then negotiate for the best mortgage rates each lender has to offer. Shop around for the best deal. Before you sign on the dotted line with any lender, read the fine print. Know what you are signing. It will behoove the borrower to do a little research into each lending institution’s policies and procedures when dealing with borrowers. Learn in advance what kinds of loans they offer, and if there are any penalties if you should want to refinance later on for a better interest rate.
If you have been following the lending market you will have noticed that the average mortgage rates have dropped a fraction of a percent over a short period. Now is the perfect time to take out a mortgage to buy your dream house, or to refinance and pay off the loan you are now paying. Just recently the average mortgage rates for a 30 year mortgage dropped from 6.13 percent interest rate to 5.87 percent, and a 15 year mortgage dropped from 5.60 percent to 5.27 percent. An adjustable rates mortgage has increased, while the fixed rate mortgages has decreased slightly.
Before you secure a mortgage or refinance the mortgage you have borrowers should know the average mortgage rates. You can go online to several different lending companies’ websites and find the average mortgage rates from weekly to monthly periods. You may notice that different lending companies advertise different interest rates, and you might also see that the 30, 20, and 15 year fixed rate loans have fairly high APR’s, which are fees that are added onto the yearly interest. Shopping around for the best interest rate is your best option.
The average mortgage rates fluctuate from week to week, so if you are applying for a mortgage loan you should know you have an option to lock-in your interest rate or float it. If you lock in your interest rate and the rate drops before your closing you are obligated to the locked-in rate you signed up for, but if you float your interest rate, that means you can lock it in any time before closing. Borrowers often float their interest rate because there could be a chance that the interest rate could drop before they close the deal.
When applying for a mortgage, ask questions if there is anything you don’t understand about the process. It is a good idea to write your questions down before going to see the lender, so that you don’t forget to ask. It is better to ask than to get locked into a contract that isn’t just what you want. Besides considering the average mortgage rates, you should consider how many points you would like to pay at closing. Each point represents 1 percent of your loan. The more points you pay for the better the interest rate you will receive from your lender.
Another way to possibly get a deal below the average mortgage rate is to have a sizable down payment. It’s a good idea to start saving long before you are ready to buy a home and take out a mortgage. Saving 2 percent or more of the amount of money you will need to borrow will help to bring down the interest rate. Many people who work have money taken out of their paychecks automatically and deposited into savings. Another way to come up with a down payment is to borrow from a 401k. There are so many ways to get a loan with an interest rate under the average mortgage rates. Taking the time to save and research can save you a significant amount of money over the term of your mortgage loan.
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