Complexity of getting mortgage
When thinking about mortgage as one of the biggest debts you will get for a lengthy period of time, you probably ask yourself what are the ways to get most competitive mortgage conditions and a low home loan interest rate. Mike Credit perfectly understands it and offers you a guideline to examine the mortgage choices to ensure you get the best scenario for your needs.
Pay attention to details
Swimming in the terms and conditions
A mortgage loan consists of the following components: a down payment (or initial sum you pay for the loan), collateral (i.e. the home you are buying), taxes, insurance and a mortgage rate, which is the interest fee, expressed as a percentage of the borrowed funds, that you will pay to the lender on a regular basis.
Care about your credit score
Mortgage rates are strongly influenced by the credit score that you have. When reviewing a loan application, the lender analyzes the risk of the potential customer's default, therefore a borrower with a negative credit history will get a higher interest rate as he is less likely to fulfill his financial responsibilities. That's why it is crucial to maintain your creditworthiness and demonstrate stability.
Fixed-rate vs. ARM
Depending on the interest fee, there are two basic types of home loans: a conventional fixed-rate mortgage with equal installments throughout the loan tenure, and an adjustable-rate mortgage (ARM) that implies a fixed rate at the onset of your loan, after which it will be periodically adjusted. So, which one is a better choice?
If you buy a house in the rising interest environment when loans are expensive, by deciding in favor of ARM you will gain the benefits of a lower rate during initial repayment period. However, afterwards your monthly payments will be subject to fluctuations of federal interest rates. On the other hand, a fixed-rate mortgage makes sense in case you value stability and hate surprises, especially when it comes to your financial state. No matter how unstable financial markets are, your FRM installments will remain the same until the last day of your loan. The downside of stability is higher interest fees at the beginning, compared to ARM. It's up to you to choose what suits you best.
Compare with Mike Credit
The mortgage rate choice is an important decision that will directly affect your monthly payments. Learn more about today mortgage rates by using our online mortgage calculator and discover current mortgage rates for 30-year fixed, ARM and more to select the mortgage corresponding your goals.