subject: Making an informed decision when buying a home based on today's mortgage interest rates [print this page] Before you even start looking for a house to buy, you should be aware of the price range that you are looking at, based on what the bank has agreed to give you. This amount is based on a couple of factors. First are of course your income and the second most important factor being the lending rate. Today's mortgage interest rates have a number of options built in to them to help make the burden of such a large amount more bearable. One of these variables is the option to fix the interest rate for a period. This peace of mind does not come without its costs. The bank is taking a risk and to cover themselves they hitch up the fixed rate to one or two percentage points above the prime lending rate. In an unpredictable environment this extra couple of bucks actually saves you so much more than that. Instead of fixing the rate for the full term of the mortgage it is possible to fix it short term. This means that you are less of a risk to the bank and the rate stays closer to the average lending rate. Once this term is over you are able to renegotiate a new rate fixed for a new term based on the prime interest rate at that time. Today's mortgage interest rates also are flexible enough to allow, the soon to be, home owner to choose the mortgage term. These vary from 15 years, 20 years and also 30 years. A mortgage repayment for the same loan amount is less over a longer term. This is a lower risk to banks because they understand that the home owner will be under less pressure to make the financial commitments.
Making an informed decision when buying a home based on today's mortgage interest rates
