Real Estate Mortgage Rates


Real estate mortgage rates are those interest rates which you have to pay for getting loans to buy a house or when you take a loan against your home.

There are two types of mortgage rates - fixed mortgage rate and variable mortgage rate. As the name suggests, fixed mortgage rates remain the same until you have completed all your installments of the loan. On the other hand, variable mortgage rates may increase or decrease throughout the loan period, depending on various factors likes inflation etc.

You can save money by opting for Variable mortgage rates, which are usually low as compared to the fixed mortgage rates as fixed rates are not influenced by fluctuation in the economy. Also, you can attempt to take a higher loan amount as monthly Variable mortgage payments are less when compared to fixed mortgage rates. However, you may have to shell out more with Variable mortgage rates when the market is going through upheaval.

These days, lenders also provide other alternatives, which are a combination of both fixed and variable mortgage rates. Buyers can opt for fixed mortgage rate for a couple of years and later shift to variable mortgage rates. Some lenders also let you decide the monthly mortgage payments you want to pay. But it is advisable that you are aware about all the finest details while opting for such alternatives so that you may not be cheated.

Tips to keep in mind before deciding on Real Estate Mortgage Rates

  • First of all, you should decide how much house you want and how much loan you can afford. It is generally believed that your monthly mortgage payments should not exceed 25-30 per cent of your monthly income which makes it easier for you to meet all your other expenses.
  • Get a copy of your credit report from the credit bureaus which your local mortgage lenders recommend.
  • You should decide on the type of mortgage rate depending on how long you want to stay in that house. If you will not live more than three years in the house, it is better to opt for Variable mortgage rates or Adjustable Rates Mortgagewhich offer low interest rates initially, say for one year. After one year, rates fluctuate depending on market conditions.
  • You should also decide on the mortgage term i.e. how long will you take to pay your loans. Mortgage term is generally either 15 years or 30 years. Fixed mortgage rates for the term of 30 years are more popular as monthly mortgage payments would be low due to the longer term. However, you may suffer a setback if the market price of your house crashes. The term of 15 years may have low interest rates but high monthly mortgage payments as the loan has to be fully paid within 15 years.
  • It is very necessary to be aware about the finest details about the mortgage rates so that you take a right decision. Get as much knowledge as possible about interest rate policies, terms and conditions, and fees of both the mortgage rates. You can also talk to your friends, relatives and family about their experiences in this regard which may help you to come at a final decision on which mortgage rates to choose.
  • It is advisable to consult four-five different lenders be it mortgage companies, banks or credit unions before deciding on a particular lender. Compare the fees, facilities, policies, terms and conditions and closing costs of all the lenders to get a clear picture of what every lender will/will not provide.
  • Government Mortgage Loans - There are some government agencies like Federal Housing Administration (FHA) and Veterans Administration (VA) which offers low down payment and low interest rates to ensure affordable mortgage. The buyer may just have to pay three per cent of the total amount as down payment if he approaches FHA but he may also have to buy mortgage insurance. Veterans Administration, which is meant for US military veterans, offer mortgages with no down payment.
  • It is advisable to ask lenders beforehand about their closing costs, which can run into thousand of dollars. Closing Cost is basically fees charged by lenders at the time of closing mortgage deals. It is also known as origination fees, appraisal fees or prepaid. Take these costs into consideration while deciding on a particular lender.

Keep these things in mind and you can look forward to fulfilling your dream of owning your own home without any worries and tensions bothering you.