Homebuying 101: Interest Rates

Finding a good interest rate for your personal home loan will be a primary objective when borrowing money. As well it should be! Advertisements on the web, radio, television and even billboards have highlighted the importance of interest rates. With all the information available out there, it's easy to become confused. For example, an advertised interest rate may only be available for a short period of time, or reserved only for qualified borrowers for specific mortgage programs.

My team and I are here to assess your personal loan situation to ensure you are advised on the most suitable loan programs for your needs. Once we've narrowed down some financing options, we'll quote a competitive rate. We'll also advise you on when it's best to "lock" that interest rate so that it is secured through your closing date.

Annual Percentage Rates

All lenders are required by law to state the total cost of obtaining mortgage financing, which is reflected through the Annual Percentage Rate (APR). The APR takes many of the fees associated with the loan into consideration, and will almost always be higher than an interest rate. While two lenders may advertise the same interest rate, the APR may differ between the two offers. If a lender is offering a very low interest rate, consider the total cost of financing--the APR--and the qualifying restrictions to obtain that rate.

Mortgage Term

The mortgage term is the amount of time the homebuyer will pay the mortgage. At the end of the term the home loan will be paid in full and the borrower will own the home free and clear. When purchasing a home, homebuyers may wish to consider the amount of time they will stay in that home as a factor for their mortgage selection. The most popular mortgages are 15 and 30 year fixed rate mortgages, which means that for the duration of the loan, the interest rate will never change. Every monthly payment will be allocated to interest charges and reduction of the loan's original balance. A term can be shortened when borrowers pay more towards the principal balance, ending the mortgage ahead of schedule.

Interested in learning more? Contact us today!

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