Understanding Interest
Rates
If you are in the market
for a new home, or it is time to refinance your mortgage, there is no doubt you
have been looking at the current interest rates. But with all the financial jargon and the
multitude of lenders and mortgages available, understanding your options can
really be confusing. Here are some
simple facts about interest rates and how they affect your bottom line.
Do Your Research
As with any major
decision, knowing the facts about the housing and financial markets before
making any major decision is of vital importance to protecting your
investment. Review online the national
mortgage rates for different types of loans.
There are a number of sites where you can find this information, or you
can ask your Premier Beach Realty Agent to point you in the right direction. In general, fixed rates will be higher, but
as they don't fluctuate over the term of your loan they may be a better choice
for those who need the stability of fixed payments. Also when comparing interest rates, be sure
you are comparing the APR, or Annual Interest Rate, to ensure that your
comparisons are on equal ground.
Also keep yourself
informed on some of the riskier options that may be out there. ARMs, interest-only mortgages, no-doc loans,
and 100 percent mortgages are some of the more aggressive loan types out
there. They may be appropriate for your
situation, but they present more risk for the lender, and are not always a wise
financial choice. They also often come
with higher interest rates that may return to haunt you later.
Preparing Yourself To Get
The Best Rates
Understood or not,
ultimately we all want to get the best interest rates for our mortgage in order
to save money. No matter what type of
mortgage you choose, there are a few steps you can take to get the best rates. You can reduce your rates by:
- Saving a sizable down payment
- Establishing a pattern of paying your bills on time
- Reviewing your credit report and correcting any errors
- Shopping around with multiple institutions and different types of lenders
Armed with these simple
facts, you can protect yourself from bad financial choices and remain aware of
the steps you should take to get the best interest rates.