Local Mortgage Rates
Getting ready to buy a home, especially your first home, can be a challenging process. One concept that can be confusing for those looking for financing is mortgage rates, and how to find the best one available.
Calculators
Current Mortgage Rates
Mortgage rates today vary considerably, depending a variety of circumstances surrounding the purchase of a home. Depending on whether you’re looking at thirty-year mortgage rates, twenty-year mortgage rates, or another loan term, most lenders have a variety of available rates for all the types of home loans they offer. These rates often differ by location throughout the country, and from lender to lender. Qualification for specific interest rates on specific types of loans depends upon several factors. These include the amount of money a buyer has to put down as a percentage of the loan amount the buyer is trying to borrow, the term (length) of the loan, the buyer’s credit history and credit score, the term the rate is guaranteed for (if the buyer is seeking a adjustable-rate mortgage), whether the home will be owner-occupied or serve as a rental or second home, if the mortgage is to refinance the home or for its initial purchase, and the amount and type of discount points the buyer uses.
Understanding Origination and Discount Points
There are two types of points (fees) that a borrower pays to the lender when closing on a home: origination points and discount points. Origination points are flat fees that are paid to the lender to cover the costs associated with processing the loan. Discount points, on the other hand, are used to give the borrower greater flexibility in getting the type of mortgage they need at a rate that fits their financial situation and outlook. They are typically equal to a single percentage point of the amount of money borrowed under the mortgage. Depending on how long you will own the home, it may make sense for you to pay the lender points in order to lower your monthly payment. Generally speaking, if you will be in the home for a longer period of time, it makes sense (provided you have the funds at closing) to pay the lender points to lower your rate. Plus, points are considered a type of interest payment by the federal government and may be tax-deductible. There are also some situations in which having the lender pay you points in exchange for a higher rate (and higher monthly payment) makes sense. For instance, this is the case if you know you’ll be able to afford a higher payment long-term, but need more immediate help with closing costs.
Qualification for Home Loans and Interest Rates
Understanding mortgage rates and points can be challenging. That’s why it is generally best to consult with a professional in the mortgage lending industry to help you understand what your options are, given your location in the US, your financial situation and outlook, and the particular amount you are looking to finance. With a little research and a little help, you’ll be navigating the world of mortgage rates and points, no time.