When considering the purchase of a new home, investment property or refinancing your existing home loan, it’s best to familiarize yourself with how financing changes things. Current mortgage interest rates have a major influence toward your overall purchasing power. It is important to obtain a mortgage with an interest rate that suits your circumstances. Options for financing your property depends on your personal financial situation and your unique desires.
Interest rate is the rate at which interest is paid to a lender by the borrower for use of loaned money such as a mortgage. Higher interest mortgage rates simply mean that your monthly mortgage payments will be greater than financing at a time when interest rates are lower.
An adjustable-rate mortgage differs from a fixed-rate mortgage in many ways. This interest rate changes periodically, typically in relation to other factors. Monthly payments may go up or down during the period of your ARM loan. You may consider refinancing when interest rates are low if you have a variable interest mortgage rate.
Shopping for a fixed interest rate mortgage may save you a substantial amount of money. Future interest rates will have no impact on your loan, meaning your home loan monthly payments for principal and interest will not increase. The fixed rate does not change during the period of your loan which is usually 15 to 30 years.
Many different types of mortgage interest rates are available. Choosing your mortgage and type of interest rate may be the most important financial decision you will make.