Mortgage-Loan: Getting The Lowest Interest Rate

Mortgage-Loan: Getting The Lowest Interest Rate

Before you get a mortgage loan, you will want to have good credit in order to get a low interest rate. You may be asking yourself what is good credit? How does my credit score compare to others, and how do lenders view the different credit scores? Basically, anything above an 800 is considered excellent, 750-800 is very good, 700-750 is good, 650-700 is fair (average is around 678), 600-650 is bad, and anything below 600 is very bad. You can get your credit score on-line anytime you want. If your credit is not where you want it to be, if you have the time, you can try improving it before you try to get a loan by using credit to pay for things and then making your required payments on time.

No matter how your credit is, you will want to strive to get the best interest rate on a mortgage loan. To compare interest rates, you will want to compare between a fixed interest rate and an adjustable interest rate. With a fixed interest rate, you will be paying the same interest rate throughout the entire duration of the term of the loan. Therefore, you will not be at risk of ever having to pay a higher interest rate than what you started with. So, if you are able to start out with a low interest rate, a fixed rate will be your safest bet since you can also always refinance if the interest rate drops a lot lower than what you started out with.

An adjustable rate will constantly change during the course of the term. Adjustable rates do not necessarily change with the housing market's interest rates either, so it would be impossible to predict how the adjustable rates would change. However, many mortgages put caps on adjustable interest rates so that they will not go higher than a certain interest rate. Many mortgages also have adjustable interest rates that are fixed for the first few years or so, meaning that the interest rate will stay the same for a specific amount of time, and then it can change anytime for the duration of the term. If you are able to get a low fixed adjustable rate with a low cap, it may be worth getting an adjustable interest rate since the initial rates tend to be lower than fixed interest rates, and you can also refinance at any time with adjustable interest rates.

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