Mortgage Rate:
Mortgage rates helps buyer to understand their home buying capacity, the monthly payment and the cost of loan. It refers to rate of interest that is charged on a mortgage. Mortgage rate fluctuates with time due to a swing in the interest rate cycles which ultimately affects the market.
The mortgage rate spikes with a higher risk due to a number of factors associated with it. This high rate helps lender to retrieve the loan initially at a faster rate.
The borrower’s credit score is one of the main components to assess the size of mortgage loan. This aids the borrower to get a lower mortgage rate by the lender because of the reduced risk.
Types Of Mortgage Rate:
In the home- buying market, there are different options for the borrowers to ponder over the home loans. Some are discussed below.
1. Fixed- rate mortgage: In fixed- rate mortgage, the interest rate remains fixed throughout the payment of home loan. This benefits the borrower when there is rise in the interest rate in the markets but fails to benefit from the declining rates of interest.
2. Variable- rate mortgage: In variable- rate mortgage, the monthly payment varies over the time period of mortgage. It is due to the fact that there is fluctuation the market interest index which ultimately affects the interest rates of the loan.
3. Graduated payment mortgage: In GMPs, the borrower makes small payments of the loan initially and it gradually increases over 5- 10 years.
4. Automatic rate reduction mortgage: in this, the mortgage lenders lower the rate of the current mortgage when there is rise in the interest rates. When the interest rates spikes, the lenders cannot increase the mortgage rate. This act prevents borrowers to refinance their mortgage.
5. Growing equity mortgage: GEMs facilitate the borrowers by reducing the principal on the mortgage. As a result, the borrowers pay off their mortgage in a short period of time.
Current Mortgage Rate, 30 Years Mortgage Rate And 15 Years Mortgage Rate
Comparison shopping helps borrowers to take on the best loan plan with the budget hands on. This also allows the buyer to determine the lender with the lowest loan plan. The interest rate calculated helps buyer to choose for a better loan plan.
The APR represents the total cost of the loan on an annual basis. The APR helps buyers to look at the total cost of loan when comparing the rate quotes. In some cases, the interest rates shown are low but other expenses charged by the lender are high, so one must compare the APR and not the interest rate.
Conclusion:
Hunting for a home has never been easy when there are so many factors to look upon. Mortgage rate facilitates the buyers with not only look out for the lenders but also aids in keeping track of the interest rate, APR, refinancing and multiple mortgage rate options.
