Mortgage rates are repaid or written off over a preferred loan term and they depend heavily on the annual income pf the loan taker. To determine this figure, most mortgage companies calculate certain ratios based on which they evaluate the monthly mortgage payments of both the interest as well as the principal. The flexibility varies with each company, but are you yet to decide which suits you best?
Choosing the Right Mortgage
The Mortgage is best when it suits your needs, and believe me, there is always one that will. To determine the best mortgage for you, you ought to understand mortgage rates instead of simply joining the ongoing bandwagon when they say that the mortgage rates are trending lower during that time.
Lowe interest rates definitely factor for, but are not the only parameter to be considered. You must also estimate any fee which is associated with the loan, to be paid before or the during the closing of the loan deal. This estimate should include every cost involved, including that invested to procure the required documents for the loan.
Here are the 4 things that most lender would consider ad analyze to determine any details about your mortgage.
- Your Credit History
- Your Current Financial Situation
- Amount that you need as a loan
- Amount for the down payment
Mortgage rates are the terms you set during your loan term in paying for your home. The options you have for the mortgage rates depend on the lender’s evaluation of your the above criteria. Some things you need to know about low mortgage rates before you go to a lender are:
The types of Mortgage Rates
Mortgage rates can largely be qualified into four types with each having different amortization plans, and each have their own set of advantages as well as disadvantages. That is one reason why you should be even more cautious in selecting the appropriate loan which is tailor fitted to your financial situations.
Fixed Rate Mortgage
Fixed rate mortgage is the traditional loan with a loan term of 10,15, 20 0r 30 years. The interest rates remain the same throughout the term and you will be required to pay around 5% of the total cost as a one- time payment during the closing of the loan.
Adjustable Rate Mortgage(ARM)
This particular loan offers lower rates for the first few years of that particular loan. Some ARMs would adjust to a fixed rate mortgage whereas most will not.
The ARM is a capped loan and the interest rates once high, will remain so until the end of your loan term. Take this loan only when you are anticipating heavy increase in wages.
Balloon Mortgage is best for those wanting a short term loan or those who plan to stay in the home for no more than seven years since it offers lower interest rates for loans with a repayment term of upto seven years.
If however you have balance unpaid at the end of the term , you may as well refinance from the same or different lender.
For borrowers who have excellent credit history and income to match, lenders agree to give this loan option due to higher monthly payments. These loans range from a million dollar upwards.
What will determine your mortgage should be your monthly income, attendant fee and the fact that by when would you conveniently break even. Examine your financial situation and prospects before zeroing in what you feel is the most appropriate mortgage for you.