Mortgage rates are one of
the largest driving factors when it comes to getting a mortgage loan for a mortgage refinance, a
purchase, or for many people a bad credit mortgage option. To understand what
interest rates are, and how they work in the mortgage world, let's go over a few key factors that make mortgage
rates what they are.
First and foremost, the interest rate on a
mortgage loan is simply the rate of interest that you will pay on a sum of money amortized over a period of
time. The most traditional type of mortgage is a 30 year fixed mortgage, which means that the
interest rate will be in effect, month in and month out for the entire life of the loan. There are many different
types of mortgage refinancing programs out there, as well as new home loan
programs which allow for the interest rate to be fixed, adjustable, and even reversed. The key to understanding
how much these interest rates will affect you is easy, and one simple form can give you all of the information
that you need. This form is the Good Faith Estimate which is required to be given to every borrower that is
looking to purchase a home or get a mortgage refinance.
The Good Faith Estimate is a form that was
enacted by law to give to a borrower as it shows you exactly how much you will pay in interest over the course
of the loan. This number is good to be able to see in order to see how different interest rates that are being
offered will affect the bottom line that you have to pay. This can help you to make the
right choice when it comes to selecting the right mortgage product, interest rate, and the lender that is
offering you the loan option or program. By having this
information, you can also get a better interest rate by shopping lenders against themselves by letting them know
what rates you are being offered.
While mortgage rates may seem like they are
set in stone, they can be lowered as most banks want the assurance that they will get a payment from you for up
to 30 years each month. By understanding how these rates play out in a
mortgage refinancing situation, or when looking for a bad credit mortgage, you will be able to be much better prepared
for the overall payment that you will make to the lender of your choosing.