Monday, 18 December 2017

How to Cut Through the Confusion and Get a Great Mortgage Rate

Written by Posted On Tuesday, 03 October 2017 17:17

As much as banks and brokers strive to simplify mortgage lending, this financing process has a lot of complexity by virtue of its nature; for this reason, finding the best interest rate on a mortgage can be a little confusing for some prospective borrowers.

In the past, rate hunters used to look for mortgage interest rates advertised in newspapers or online; this is no longer the best strategy because loan officers are no longer compensated in the same fashion and because it is more important to choose a mortgage that is truly affordable, despite its rate.

With the above in mind, here are four recommendations for home buyers and mortgage holders who are in search of great mortgage rates for their purchase or refinancing needs.

Getting the Right Referrals

For first-time home buyers, nothing is more important than getting the right professionals to support them during the acquisition process, and this means having the right real estate agents and mortgage loan officers.

There is no specific order to follow when getting these referrals; as a home buyer, you can start working with a mortgage loan officer who can recommend a real estate agent from places like Jeff Glover & Associates Realtors and vice versa. In fact, it is more common these days to get qualified for a mortgage before shopping for available properties.

Evaluating Types of Mortgages

Once you start talking with your loan officer, you will understand the differences between fixed and adjustable rate mortgages. If you are planning on selling the property you are wanting to purchase or wish to sell in the future, you will find that adjustable rate mortgages typically offer the lowest rates as well as interest-only payments, but this does not automatically make them the best loans for everyone.

If you are comfortable with your current fixed rate mortgage, you should try to refinance into the same type of loan when interest rates dip.

Shortening the Term of Your Mortgage

This is a sure-fire method to get some of the lowest interest rates in the market. Ask your loan officer about the economic feasibility of getting a fixed-rate mortgage with 20 and 15-year terms instead of the traditional 360 months.

Finding out How Much House You Can Afford

Instead of being a rate hunter, you should ask your loan officer about using a Housing Affordability Index worksheet and calculator. Using the variables of the HAI formula, you can find out exactly how much it will cost you to move into a new home with certain mortgage assumptions.

In the end, you will find out that being able to afford a home is a more important factor than mortgage interest rates; plus, you will also learn that interest is just one of the many factors that add up to your total monthly payment.

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Anica Oaks

Anica is a professional content and copywriter who graduated from the University of San Francisco. She loves dogs, the ocean, and anything outdoor-related. She was raised in a big family, so she's used to putting things to a vote. Also, cartwheels are her specialty. You can connect with Anica here.

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