Mortgage Rates
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Mortgage Rates
Buying a house is one of the most exciting times of your life, it’s certainly the most expensive but you really do get a feeling of pride and putting down roots when you get your first foot on the property ladder. Unfortunately, the bottom rung is as far as some people get, a massive commitment like a mortgage really can break your finances if you haven’t had good, sound advice, got the best deal for your own circumstances and managed to hold on to your job or business.
Mortgage Rates are notorious for going up and down, and it’s a funny thing really, because if they go down everybody seems to spend their extra monthly cash getting more credit or increasing their expenses, only to find that when they inevitably shoot back up again everyone screams poverty and the number of property foreclosures rises. If “what goes up must come down” in the world, in the mortgage world you can really guarantee the reverse, ie “what goes down will go back up again” but do we learn? Never.
To be fair, nobody can blame mortgage rates for the massive increase in property foreclosures over the last couple of years, but mortgage rates do vary and are an important consideration when you think about buying a property.
Getting the Best Mortgage Rates
When you look at mortgage rates on offer, you really need to look a little further than simply the monthly repayments and the annual percentage rate. What about:
- Length of loan (months)
- Annual insurance costs
- Total amount borrowed
- Extra monthly payments (if applicable)
- Interest only options (if applicable)
- Adjustable Rate Mortgages (ARMs)
- Period of changes in interest rates (if applicable)
Generally speaking, the longer the loan term the higher the interest rates – it’s more of a risk to the lender.
Qualifying for the Best Mortgage Rates
One thing which you will discover, as soon as you start to do your homework (it’s vitally important to do your homework!) is that mortgage rates differ, depending on your circumstances. There are plenty of websites which have online mortgage calculators which are a great way of finding a ballpark figure of what you’ll have to pay out each month, which can give you a really great idea of how far you can afford to go.
Every potential customer approaches a mortgage lender with different criteria, and the lender will look at your individual situation before adjusting your base rate.
- A good credit rating can help you to get lower mortgage rates (proving that you’re low risk)
- Blemishes on your credit rating will help to hike up the mortgage rates (you’re a bit more of a risky prospect)
- A good chunk of down payment will help to lower your mortgage rates (you’re investing more of your own money so are less likely to default on the payments)
- A smaller down payment will help to increase mortgage rates (the mortgage lender needs to lend you a higher proportion of the property value which means more risk to them)
- Your current job situation and salary will also have an impact on your mortgage rate
Hindsight is a wonderful thing, and I know full well that they won’t listen, but even if it’s too late for yourself, tell your children that the best way to secure a low mortgage rate is by saving up a large down payment (or asking family!), keeping their noses clean in the credit department and making sure that all payments are made on time.
