Buying a home is a huge financial commitment, and getting a mortgage that is beneficial to you can be a confusing and frustrating procedure. But the key to getting a suitable deal or getting cheap mortgage rates is comparing all the options of all the available mortgage rates and payments.
To get a cheap mortgage rate depends solely on you in the sense that you know what mortgage rate may be suitable for you and what mortgage rate you are able to keep up with. This is why there are several factors that are taken into consideration for a mortgage and getting the best mortgage rate. The factors are:
1. How much mortgage can I afford? : In recent times, lenders set strict rules which make it hard for many mortgage shoppers to pass. But when you are aware of what type of mortgage you can afford, then passing whatever strict rules or tests set won’t be much of a problem. In considering how much mortgage you can afford, the first thing you do is to know the type of mortgage you want.
You can decide if you want a repayment mortgage which while it costs more each month, pays off the original debt or if you want an interest-only mortgage where you need a separate plan to pay off your debt and pay just the costs of the interest.
Also, you can determine if you want a fixed or adjustable rate mortgage. With the fixed mortgage, you know how much you mortgage repayment will be at every given point in time while with the adjustable rate mortgage, the interest rate often fluctuates and sometimes the interest rate is higher or lower than the initial interest when applying for the mortgage.
2. Understanding mortgage charges: To get the best mortgage rate or a cheap mortgage rate suitable for you, you have to understand all the charges that are included in a mortgage when applying for one. Many people base their decision of a cheap mortgage rate on the number of years the rate is available, the type of mortgage it is or they compare mortgage interest rates. As important as it is to compare mortgage interest rates, it is not enough to determine the cheapest mortgage rate available. But when you understand all the charges attached to mortgage, you may find out that comparing interest rates and maybe choosing the cheapest mortgage interest rate, you may attract higher fees than choosing an average mortgage interest rate.
3. Know how much can be paid down: Knowing how much can be paid down to attract lower mortgage interest rates is a relevant factor because generally speaking, a low down payment often attracts high interest rate and sometimes, most mortgage applicants pay for private mortgage insurance (PMI) which lowers the risk for the lender and you may have to pay 0.5% to 1% of the entire loan each year which may attract thousands of dollars to what it costs to carry the loan. But the cheapest mortgage rates are mostly determined by the down payments you make and it is usually often advisable to save enough money for a 20% down payment, because it reduces interest rates. And as stated earlier, the lower the down payment, the higher the interest and vice versa.
4. Talking to a mortgage broker: The mortgage broker scours the market to find a good mortgage deal and using one, you can get the best deals of mortgage rates or payment from lenders. Also, they advise you on help to buy mortgages and help you in understanding all the mortgage schemes.
Getting the lowest mortgage rates happens long before you apply. And while it is important to talk to mortgage brokers or realtors, it is not advisable to trust all that they tell you but instead, do your own research, find all the necessary information needed, and know what mortgage rate would be the cheapest mortgage rate that is most appropriate for you to keep up with throughout the entire mortgage period.