Mortgage Rate Watch

Mortgage Rate Watch Information and Resources

When looking for a mortgage loan, first make sure you are comparing current mortgage rates for the same type of mortgage. Mortgage rates and closing costs can change significantly from within days. If you are comparing offers from multiple mortgage lenders it must be done on the same day. For example, if you are looking for mortgage rates and have a quote for a 30 year fixed at 5.75%, only compare it to other 30 year fixed quotes at the same 5.75%.

 

The second step is to compare the total of all points and lender fees for each mortgage that is the price of the mortgage. The lender with the lowest cost has the best mortgage rates.

If you are refinancing, you will also need to review the cost of title insurance, closing/attorney, and appraisal. Some large national companies have negotiated excellent rates for these services on your behalf. The company with the lowest combination of points, fees and third party costs for the same rate and product has the best mortgage rates.

 

APR (annual percentage rate) is not always accurate, so it should not be used. To get the best mortgage rates, compare current mortgage rates and closing costs.

 

Good Faith Estimates are just estimates. Many brokers and lenders will give you a low estimate, and then after you have paid for your appraisal, they will inform you that the mortgage rate or closing cost have gone up. Look for lenders that guarantee their closing costs up front.

 

There is nothing wrong with No/Zero Closing Cost Loans. Just be aware that you will be looking at higher mortgage rates in exchange or if you are refinancing, the closing costs could be included in your principal.

 

Paying higher points and fees will result in lower mortgage rates. For example, at 7% you may have zero points and fees, while at 6% you may have points and fees of $3000. To get the best mortgage rates, you must estimate how long you will have the mortgage. Also, make sure you are comparing current mortgage rates when doing your comparison.

 

There are several types of mortgage loans that have different rates over the loan term.

 

A Fixed Rate Mortgage is a home loan that provides a fixed rate for the entire term of the mortgage loan. The monthly payments are fixed over the life of the loan because the interest rate does not change which protects the borrower if market mortgage rates rise. Additionally, fixed rate mortgages provide stability so that a borrower can better manage his or her monthly finances. Fixed Rate Mortgages are offered in a variety of terms of 10, 15, 30, 40 years.

 

An Adjustable Rate Mortgage, or ARM, is a loan which provides a fixed rate for an initial period of time. During that period, the rate does not change. Once that period is over for that specific type of ARM mortgage, it then converts to an adjustable rate based on specific terms. From that point on, an adjustable rate mortgage rate will adjust typically every year based on the current mortgage rates. The pros of an ARM include low initial mortgage rate, low initial monthly payment, and it allows the borrower to qualify for a higher loan amount than with a fixed rate mortgage. After the initial fixed rate period, mortgage rates could drop, which would decrease the monthly payment. Adjustable rate mortgages can be found with many different initial fixed rate terms and typically include a 3 year ARM, 5 year ARM, 7 year ARM and a 10 year ARM mortgage.

 

An Interest Only Mortgage is a mortgage loan that only requires a borrower to pay interest for fixed period of time. Interest only loans allow a borrower to lower initial mortgage rate, lower your initial monthly payment, and qualify for a larger loan amount.
Interest only mortgage rates adjust annually, bi-annually or monthly. Therefore, mortgage payments would also adjust. Once the interest only period (usually 10 years) expires, the mortgage loan amortizes like a regular mortgage and the borrower must start paying off the principal. Interest only mortgages are great for those who wish to manage their monthly cash flow closely. For example, if you have a variable monthly income due to bonuses and commissions, an interest only mortgage may a great choice for you. For a month with a lower income you can just pay the interest, while during lucrative months you can put more down toward your loan principal so you pay off your mortgage faster.