by First Option Mortgage
21. July 2010 03:36
What You Need To Know About Shopping For Mortgage Rates
Shopping for mortgage rates can seem complicated at the best of times. There is much more to getting the best mortgage rates than just calling around and deciding to go with the mortgage company that instantly offers you the lowest mortgage rates for your property. Every mortgage broker and mortgage lender actually has a range of mortgage rates and what you actually qualify for depends on your personal circumstances and the property that you are purchasing or refinancing. In order to qualify for the best mortgage rates it is wise to get all of your paperwork together first and obtain a copy of your credit report for yourself as this will also enable us to accurately quote you mortgage rates.
Now is certainly an ideal time to buy or refinance a home, not only because of the incredibly low home prices but because mortgage rates across the US are at historical lows. At the time of writing this article according to a public mortgage rate website current average mortgage rates in Atlanta, Georgia are 4.93% for 30 year fixed rate loans, 4.33% for 15 year fixed rate mortgages and just 3.8% for 5/1 ARM loans (rates vary by the minute).
Before making a decision on a mortgage loan it is wise to use a mortgage calculator to analyse the benefits of different mortgage rates and the different loan programs and terms available. Obviously the shorter the term (of fixed portion) of the loan generally the lower the interest rate and often resulting monthly mortgage payments. It is wise not to over extend yourself in the desire to obtain the lowest rate and you must consider your long term goals and how long you plan to stay in the home.
Shopping for the best mortgage rates is about more than just the interest rate. The true cost of the loan is disclosed in the effective APR. This is the effective Annual Percentage Rate when the fees associated with taking out the loan are taken in to consideration. When you are shopping for the best mortgage rates you must look at both the interest rate and the APR.
The biggest cost that affects the true APR of your loan is whether you are being charged points in order to receive that rate. Each point is equal to 1% of the mortgage loan amount. Points are paid in exchange for lower rates and are normally negotiable. Whether it makes sense to pay extra points for lower mortgage interest rates depends on how long you plan to keep the home. The longer you keep the property the more sense it makes to pay points as you will realise the interest rate savings over a longer period of time.
When shopping for the best deals and mortgage interest rates you also need to pay attention to the other fees being charged. Make sure you are comparing apples to apples. The third party fees such as title insurance, inspections and appraisals really should not vary between mortgage companies and will not affect mortgage rates offered. However, the individual mortgage lenders you approach will often charge different fees for credit reports, processing, underwriting and broker fees. Obviously you want to try and negotiate the best deal possible but at the same time be willing to pay a reasonable rate for great service.