Mortgage Essentials Top Bad Credit Lenders Refinancing Essentials Refinance Companies Mortgage Lenders by State Bad Credit Mortgage FAQs Top Mortgage Markets Buying & Owning A Home

Mortgage Rates

With current instability of our economy in the United States, mortgage rates have stayed near historic lows for quite some time now.  The mortgage interest rates are one of the most important factors to consider when you are thinking about getting a home loan or a mortgage refinance.  Rates will be different, and lower, if you have excellent credit and can get a traditional loan, than if you have poor credit and must get a bad credit mortgage loan.  Understanding more about mortgage rates will help you get a better mortgage loan that will fit your needs.   

Mortgage rates are fairly simple to understand.  Your mortgage rate is the annual interest rate on the amount of money you are borrowing.   The rate is applied to the total amount of the loan, and is amortized over the life of the loan, or the loan term.  The loan terms are typically 15, 20 or 30 years.  The lower the interest rate you are being charged, the lower your monthly payments will be and the less interest you will pay over the life of the loan.  Even a quarter or a percent difference in the interest rate can make a difference in your monthly payment.   

An ARM, or adjustable rate mortgages, sets an adjustable rate of interest for a specified period of time, then it adjusts based on market interest rates the rate is tied to.  With this type of a loan it can be a little bit difficult to know in advance the amount of interest you will pay over the life of the loan because you never know what the rate will adjust to or how often it will actually change over time.  With a fixed rate mortgage, you will have an amortization schedule that will list every single payment for the life of the loan.  Whether you are purchasing a home or doing mortgage refinancing, the type of loan product you choose will impact how the mortgage rates affect you. 

In order to get a better feel for how the interest rates will work for the loan product you have selected, you are legally entitled to receive a good faith estimate from your lender.  While it is just an estimate, it is a very close estimate that will show you all of the costs of the loan.  This will include your monthly payments and how much goes toward principal and how much goes toward interest, as well as your closing costs etc.  When you are comparing lenders, this good faith estimate will be important for you to use in your analyzing.  It is also helpful to know that when you hear about advertised rates, the only one that is important to you is the APR.  This takes into account the closing costs and all your other costs, so it truly tells what you will be paying.