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Mortgage Rates  


With the way the economy has been over the last little while, you may find that mortgage rates have stayed near historic lows for quite some time now.  The mortgage rates are one of the most important things to consider when you are thinking about getting a home loan or a mortgage refinance.  Rates will be different if you have excellent credit and can get a traditional loan than if you have poor credit and must get a bad credit mortgage loan.  Understanding more about mortgage rates will help you when you are ready to take out that mortgage loan. 

 

Basically, the mortgage rates fairly simple to understand.  Your mortgage rate is the interest rate on the amount you are borrowing.  The rate is applied to the total amount and is amortized over the life of the loan, or the loan term.  The lower the interest rate you are being charged, the lower your monthly payments will be and the less interest you will pay overall during the life of the loan. 

 

ARM mortgages use an adjustable rate where the initial low rate is set for a period of time and then it adjusts based on market indices that the rate is tied to.  With this type of a loan it can be a little bit difficult to know in advance the amount of interest you will pay over the life of the loan because you never know what the rate will adjust to or how often it will actually change over time.  With a fixed rate mortgage, you will have an amortization schedule that will lay it out for you in black and white.  Whether you are purchasing a home or doing mortgage refinancing, the type of loan product you choose will impact how the mortgage rates affect you. 

 

In order to get a better feel for how the interest rates will work for the loan product you have selected, you are legally entitled to receive a Good Faith Estimate from your lender.  While it is just an estimate, it is a very close estimate that will show you all of the costs of the loan, including the way the mortgage rates will affect the amount of interest you will be paying.  When you are comparing lenders, this is an important form that will help you know when you are getting a good deal.  It is also helpful to know that when you hear about advertised rates, the only one that is important to you is the APR.  This takes into account the closing costs and is adjusted accordingly.