Buying a property is always a big investment for most of us, and hence, we look for the best mortgage rates so that the burden of mortgage gets a little diminished. We have all seen big posters and advertisements stating very low mortgage rates, but have never really got our hands on, on any of them.
In this article, we will see some of the tips, that might help you in getting a better deal. Because, sometimes getting promised aand then eventually getting the same rate, which others are getting are pretty frustrating. But, the preliminary step in getting a good mortgage rate needs you to do some legwork and give in some effort.
The best way to get a good mortgage rate is to shop around, and, see which of the mortgage rate is the lowest. Often most of us, gather only one quote either from our real estate agent or, from our bank, and then go forward with it, later realizing that we are paying more.
Truth of Advertised Mortgage Rates
Sometimes, we see some really low mortgage rates advertised on TV, or through Radio, or through flyers even. Now, they will often have some points included in it. So, for instance, if the advertisements say something like, 3.75% with 1 point, it generally goes on to mean that, you need to deposit 1% of your principle amount to the bank, and then they will provide you the mortgage amount. Just to put that in to perspective, if your property costs $200,000, you need to pay $2000, initially to avail that mortgage rate.
Again, sometimes the mortgage rates are subjected to best case scenario, which generally goes on to mean that, if you need to avail that mortgage rate then you need to have a credit score above 800, or you need to pay about 20-30% of the total principle as a down payment.
Hence, before jumping to the conclusion you need to examine what are the conditions associated with the mortgage rate.
Lowest is not Always the Best
Most of us, go for the lowest interest rate, without even considering the effective rate which we are paying to the bank or the mortgage provider. Often it is seen that the lowest interest rates are accompanied with points or have steep fees associated with it.
When you do opt for a mortgage, just make sure that you know what is being charged from you in total, and then, consider if it’s a good mortgage or not.
Compare Loan Types
While you are searching for a mortgage, always consider which type of mortgage do you want to take, the 15 years one or the 30 years one. You need to consider; how many years are you going to stay in the property. If you are not going to stay for 30 years, then there’s no point in taking a mortgage which would continue for 30 years. You can apply for a much lower rate under the 5/1 ARM.
At the same time, you can also re-finance your mortgage to a lower rate, if the amount is not that huge. For instance, if you were on a 6% mortgage rate, on a 30 years fixed mortgage plan, then you can drop the rate to almost 3% or less, by re-financing the mortgage at a 15 years mortgage plan.
Find the best rates at super-rates.com.