If you are about to sign for a 30 year mortgage rate, you may be more than a little overwhelmed at the size of the commitment you are undertaking. While there is no doubt that a mortgage loan is one of the biggest financial obligations you will ever take on, there is some comfort in knowing that you went into the process informed about mortgages work. We have the basics of what goes into a 30 year mortgage rate, so you can rest assured that the biggest loan of your life will be easy to understand and familiar in every way.

The P & I

The mortgage loan basically consists of two parts; the principal amount, which is the actual amount of your loan, and the interest, which is the money you pay to the lender for the privilege of holding your mortgage loan with them. This amount will be directly affected by the 30 year mortgage rate that you negotiate with your lender. These two figures are generally lumped together in what is known as the “P&I” payment, and will usually remain consistent throughout the life of the loan unless you have an adjustable rate that will alter the interest amount from year to year.

The Term

A 30 year mortgage rate will be affected by the current market trends, but it will also be determined in part by the type of loan terms you and the mortgage broker agree to. The 30 year mortgage rate can be a traditional fixed interest rate that will be consistent throughout the life of the loan. This is good news when you end up with a rate that is below market trends, but not so good if your 30 year mortgage rate is 10% and the current market shows an average of 5.5%. The good news is that you can always refinance your loan to get a better 30 year mortgage rate; the bad news is that it costs money in fees and points to do so.

Discount Points and Locking In

These terms will be thrown around by your loan officer frequently, but it can be hard to understand exactly what they mean. The discount points are often paid at the loans closing, and are usually used to buy down a lower 30 year mortgage rate. Locking in means that you and your lender are committing to a set 30 year mortgage rate, even the rates fluctuate again before the loan is actually closed. Lenders will usually lock in rates at when you are 30 or 60 days out from closing your loan, and sometimes they will charge a fee to do so. Check with your lender to see what their policies are for locking in the best mortgage rate.

The 30 year mortgage rate may still seem like a big commitment, but with a bit of knowledge about how the process works, it can seem much easier. If you are interested in a new first mortgage or a refinance, contact a mortgage loan officer today.

When you are in the market for a new home, one of the most complicated aspects of the purchase may be choosing a financing vehicle for your property. Mortgage loans have become quite diverse in recent years in an attempt to accommodate every financial need and housing purchase. One loan package that has become rather popular is the adjustable rate mortgage. These loans generally start out with an enticingly low interest rate that will rise and fall with market trends. But the adjustable rate mortgage isn’t the best choice for everyone. Read on for tips on choosing the right mortgage product for your needs.

Advantages

There are a number of advantages to the adjustable rate mortgage. As we have already mentioned, the introductory interest rate is usually much lower than what is offered for a traditional 30 year mortgage rate. However, that low rate can change periodically, usually based on the rise and fall of a 1-year US Treasury Bill or another similar benchmark. If it appears that rates are in a dropping mode, an adjustable rate mortgage might be the way to go.

This is also a good choice if you will be needing extra cash during the first year of the loan for home improvements or landscaping. However, going into debt during this time will cause a significant problem if your monthly payments end up rising before your balance is paid in full. Some homeowners will also opt for an adjustable rate mortgage if they are not staying in the house long, since the rates won’t have time to max out during a shorter term. You can also begin with an adjustable rate mortgage and then refinance as the rate begins to rise. However, keep in mind that refinancing will be done at the current market rate, which may be higher or lower than your original rate.

Disadvantages

The adjustable rate mortgage isn’t the right choice for everyone. It should not be used to get into a more expensive house than you can afford, since a rise in rates may make the home too expensive much quicker than you’d like. It is also important to understand the terms of the loan thoroughly, such as how often the interest rate can fluctuate and what the caps on those fluctuations might be. Many people are unpleasantly surprised by how much their monthly payments can go up with the rate fluctuations, so make sure you are prepared for any additional mortgage expense that might arise.

The adjustable rate mortgage isn’t right for everyone, but it can be a savvy financial choice for some. If an adjustable rate mortgage sounds like the right loan product for you, talk to a loan officer about the ins and outs of the loans they offer and make sure you understand the terms perfectly before you sign on the dotted line.

When you are in the market for a new home or looking to lower the payments on a current property, a new mortgage loan will be the logical course of action. However, there are many finance companies that will be vying for your business, offering you the best mortgage interest rate and the most affordable terms. Before you jump into the lending pool, it helps to have a few basics under your belt so that the entire process goes more smoothly.

Rates are Competitive

A mortgage company may advertise a particular mortgage interest rate for a fixed loan or an adjustable rate mortgage, but this may be negotiable based on the type of credit history you have and the amount of points you are willing to pay. To ensure you receive the best mortgage interest rate possible, it is a good idea to know what current market rates are for your area. You can easily find this information by surfing the Internet for the many websites that provide this comparison shopping in one easy click. To ensure you are comparing apples with apples, make sure you are looking at points and fees as well as the mortgage interest rate. Once you have found a good deal, you are ready to bargain with any lender who is willing to match the best mortgage interest rate you could find.

Fees are Negotiable

Fees are an unfortunate part of the lending process, but sometimes these figures are up for discussion just like the mortgage interest rate. While banks may not be able to do much to discount set fees for services like an appraisal or filing the necessary paperwork, points are an additional cost that companies often can be flexible with. In many cases, the points are directly connected to the mortgage interest rate, so when the rate goes lower the points go higher. This is why some lenders refer to “buying down” a mortgage interest rate. However, if you find one lender offering a particular rate with no points, it is fair to mention that fact to another lender who is offering the same rate with a few points tacked on. You never know when you might get those points deducted to your advantage.

More Money is Unnecessary

When you are requesting a mortgage interest rate for a refinance of an existing loan, many lenders will ask if you want to borrow additional funds for purchases like home improvements or a family vacation. Your best negotiating powers work when you don’t take any additional money out, but merely put the loan back into your property. So forget the extra cash – you will just raise your monthly payment over a 30-year haul anyway.

Finding the best mortgage interest rate is easy once you have the basics of how the lending process works. Shop around and don’t be afraid to ask lenders to go lower on their rates or fees to give you the best deal possible. You just might be pleasantly surprised at the loan terms you get.

The mortgage interest rate has been known to rise and fall, and when it’s at an all time low, it may be time to purchase a new property or refinance an existing loan. But how do you know which finance company will offer you the best mortgage rate? The options are plenty and each will promise to give you the best deal possible. However, by arming yourself with some basic facts, you can find the best mortgage rate for your loan.

Know the Competition

The first step in shopping for the best mortgage rate is to know what is available. The Internet makes comparison shopping much easier than ever before, since you can find a whole host of current rates from a variety of lenders with a single click. It isn’t a bad idea to begin checking current rates weekly, once you have a new loan in mind. This allows you to keep up with both current market trends and fluctuations that might arise. Even if you have your heart set on a particular lender, you can always throw out the lower mortgage rate of a competitor to get your loan officer in a negotiating mood.

Know the Costs of Lending

To make your comparison shopping more accurate, you need to be in tune with the sort of costs that can be tacked onto a stellar mortgage rate. It doesn’t do much to negotiate a lower rate if the points and fees are going to skyrocket as a result. When talking to lenders, you always want to find out whether points are charged to get the rate you are asking for and how much the lender charges to process and close your loan. It is important to factor in these tidbits of information, since a 5% rate that charges 4 points may not be a better deal than the 5.25% with no points after all. And points can be negotiated in some instances just like the interest rate can – especially if you know what’s going on at the lender down the street.

Know your Credit Report

It is no secret that lenders save the best mortgage rate for the applicants with the cleanest credit histories. Do you know your number? Every credit report is assessed a number that gives lenders an idea how much risk they are undertaking by offering that particular applicant funding. A credit rating over 700 is usually considered “very good” to “excellent”, while a score between 680 and 700 is considered “good”. Anything less than 680 may make you a higher risk to the lender, which may result in a lower mortgage rate. If you know you have a very good credit report, you can rest assured that you are in the driver’s seat when it comes to negotiating the best mortgage rate.

Whether you are in the market for a new home or looking for a lower monthly payment on a current property, knowing how to negotiate a mortgage rate will make all the difference in the loan you get. Keep these tips tucked under your belt when talking to lenders and you are sure to end up with a mortgage loan you like and can afford.