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Mortgage Rates are Low But You Still Need to Compare Rates and Negotiate
 

Mortgage Rates are Low But You Still Need to Compare Rates and Negotiate

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If you’re searching and comparing mortgage rates to buy a home or refinance rates to refinance a home loan there are many different types of mortgages so make sure you compare apples to apples.

Compare fixed mortgage rates with fixed mortgage rates and adjustable mortgage rates with adjustable mortgage rates. You can compare all types of mortgage rates today here: ratesorama.com/mortgage-rates.

Both types of mortgages are also available in different terms. The most common fixed rate mortgage term is 30 years. Current mortgage rates on 30 year home loans are at 3.90%.  The second most common term is 15 years. There are advantages and disadvantages to both.

30 year home loans will have lower monthly mortgage payments than 15 year loans making a home more affordable or giving buyers the ability to afford a more expensive home.

15 year mortgages come with higher monthly payments but if you can afford higher payments 15 year loans are the way to go. Why? Something called compound interest. When you get a home loan from a financial institution you are charged a rate of interest to borrow the money. Take this interest rate charge and stretch it out over 30 years and the amount of mortgage interest you pay is a lot more.

Basically depending on the mortgage loan amount you can save tens of thousands or even hundreds of thousands of dollars in mortgage interest with a 15 year loan. Plus you’ll own your home outright in half the time.

When you’re searching for and comparing mortgage rates today also compare the annual percentage rate (APR). The APR takes into account not only the mortgage rate but also points and other fees.

There is also credit charges that you may be required to pay, expressed as a yearly rate and some fees are paid when you apply for a loan and others are paid at closing so make sure to have the mortgage lender write down all the costs.

Have the lender give you an explanation of any mortgage fee you do not understand since you are paying these fees. Mortgage points are fees paid to the mortgage lender for the loan and are often linked to the mortgage rate, the lower the mortgage rate the more points you usually pay.

Make sure to write down all the mortgage quotes you receive from lenders so you can easily compare all the mortgage rates and points. Many mortgage rates fees are negotiable with the mortgage lenders so just ask if they can lower the mortgage rates or points. Contact several lenders to make sure you’re getting the best mortgage rates today.

You can use a mortgage broker instead of a lender and you might get a better mortgage rate since mortgage brokers can compare rates from many lenders and this means a wider selection of mortgage loans and mortgage rates you will be quoted.

If the mortgage rate quoted is for an adjustable mortgage rate, which means the interest rate can change at anytime as how the mortgage rate will change mortgage loan payment amount.

You should also ask each broker you work with how he or she will be compensated so that you can compare the different mortgage fees you have to pay. You should also be prepared to negotiate with the mortgagees for the lowest current mortgage rates today.

Besides the mortgage rate the second most expensive thing you will pay are mortgage closing fees. These fees include underwriting fees, broker fees, and transaction, settlement, closing costs, a home appraisal and many other fees.

When you’re comparing rates make sure to also lock-in any mortgage rate you’re quoted. You will probably pay a fee for locking in the rate but the cost of more interest payments with the mortgage rate you were originally quoted is no long available when you’re closing on a loan far outweighs any fee you pay.

If you borrow more than 80% of a home’s value you will have to pay private mortgage insurance (PMI). That is if you can find a lender willing to give you a loan at more than 80% loan-to-value (LTV).

Another way to save money is to negotiate. The mortgagee may waive or reduce one or more of its fees or agree to give you a lower mortgage rate with fewer mortgage points but they won’t do it if you don’t ask them.

Negotiate and compare mortgage rates today with the mortgagee and you should consider contacting more than one broker too. Some mortgagees will just list the number of loan points and you’ll have to pay. Every mortgagee should be able to give you an estimate of the mortgages fees they will charge you so be sure to ask the lenders about them. Loan brokers are often allowed to keep some or all of the fees as extra compensation.

To wrap up shopping for mortgage rates today or refinance rates today is the best way to go to save money on interest payments. Negotiating mortgage rates, points and fees is another way to save a lot of money on the home loan.

Just take the time and research mortgage rates and all other loan costs. I bet when you buy a big ticket item like a car, television or any other expense item you shop and compare so do the same when getting a home loan.

Author: Robert Till
February 1st, 2012