Mortgage Rates

Every choice you make with your home loans will effect your mortgage rates - go with your gut.

Mortgage Rates - Go Go Intuition

Look! Its a clue! We've found the lost Banker's Book, the single source for mortgage trickery and devious lending practices that are guaranteed to make your bank hundreds of millions of dollars each and every year - so what's it doing in your broker's desk? Hmm, if brokers, lenders, and all the rest get paid off their mortgage rates, could they possibly charge more than their mortgage loans are really worth? Lets take a look...

The true value of your home mortgage

When you purchase a home you will have to take out a home mortgage - without one your home would be impossible. We've created for ourselves a world where money is the overall ruling factor in all our daily lives, and these days we all have to pay for our home - no one really has the time to build one. So we pay, and a mortgage is the virtually priceless way in which we get that home financing. Regulations have been established to control the costs and practices of home loan providers, and one of the greatest areas if control is in the mortgage rates, or what the lenders will charge:

• you can apply for a fixed rate home loan and your mortgage rates will remain unchanged for the entire course of your lending term. This is incredibly beneficial now, when rates are low and all signs point to a future increase in overall rates. it is also beneficial for the person who knows they will be staying in their one home for an extended time - but when the average home is owned for about 7 years its easy to see we are a nation of transient gypsies.
• ARM's, including the interest only mortgage, are for those of us looking for greater loan flexibility. With an ARM we are all assuming the risk of a future rise in mortgage rates, and for that risk we are rewarded by lower initial rates that will hold for the first years of our terms then adjust annually in accordance to international financial levels. These rates are determined by indexes, and the most common indexes include COFI, T-Bills, and LIBOR ( London InterBank Offered Rate). these indexes set the tone for your mortgage rates, so its best if you analyze potential market trends and know exactly how much extra your lender is charging with their offered mortgage rates.

This extra charge is absolutely necessary - why else will your lender and their financial source be interested in supplying your loan? Mortgage rates are the cost of your home loan, and don't be surprised if the costs come to more than the loan amount itself.

Math as a means to an end

Lets say you needed a $200,000 loan and you know you are going to be in that home forever. So you take out a 30-year loan with mortgage rates fixed at an industry respectable 5.5%. Not to shabby. Using a mortgage calculator you easily see you'll pay $1,135.58 a month in principal and insurance, for a total of $408,808.08 at the end of thirty years. Wait...thats over twice as much as your $200,000 loan! Believe it, mortgage rates are extremely lucrative - each investment the lender makes nearly doubles in return - and a difference in a few percentage points will have a huge effect on your overall loan price. Lenders offer you a choice to pay down your interest from the get go with points or charges against your loan amount, and each point you pay will decrease your rate by a specific amount determined by your lender. So the choice is yours - pay more now, save more later - and you will reach this conclusion only after a long period of extensive mortgage sleuthing!

A bad loan isn't the end of the line

So what if you do fall into a loan that is less than what you expected? What if you didn't pay enough points and the rates you are paying are simply too high? Well, my well-planted spies tell me you can always find a refinance mortgage, and if not at least you can take out a second mortgage to refinance the first. Regardless of how you go about it there is always a means to escape the clutches of your home mortgage, just look around and see what lenders can offer you.