Mortgage interest rates
If you are thinking of taking out a home loan, one of the first things you'll want to consider is interest rates. An interest rate is the amount of interest paid on an amount borrowed. The rate of interest depends on the principal sum of the loan, the amount deposited (or available equity in the house), and the compounding frequency of the interest. Ultimately, the interest rate will affect the total amount of money you'll have to pay back. In addition to interest rates, you'll want to consider the length of time you plan to borrow the money.
Compared to the cost of a new car, a mortgage loan will cost you more over its life. Depending on your income and debt, the interest rate of a home loan is usually higher than the price of an auto loan. It's also important to consider how your mortgage loan will affect your credit score, so be sure to do your research before signing any contracts. This way, you'll know exactly what you're getting when you sign up for a loan.
Terms and conditions of a home loan
You'll also want to consider the terms and conditions of a loan. This way, you can determine the best interest rate and lending terms for your needs. You'll be able to determine the best terms and conditions from different lenders when you work with a mortgage broker. This can save you money and speed up your financial plan. There are some factors that you should consider when choosing an interest rate for a mortgage. For example, if you have a lot of debt, you'll get a higher interest rate. If you're looking for a high interest rate, you should consider comparing several loan offers from several lenders.
When comparing rates, make sure you compare your budget and interest payment amount for each one. Remember that interest rates are not just about calculating your monthly payments, they are a way to understand what is affecting your financial situation.
Compounding is not the simple
The difference between a simple and compounding interest rate is quite dramatic. You must note that a compounding interest rate also takes into account the new balance that includes the new interest amount added to the previous outstanding balance owed. All mortgage interest rates are compounding interest. The only difference is the frequency of compounding, which can be monthly, or semi-annually. You should ask for a mortgage amortization table to determine the full scope of interest payment amount over the lifetime of the mortgage loan.
A simple interest rate calculates interest from the original principal balance amount, instead of the recent outstanding balance owed. This is how simple interest is different than compounding interest.
Fixed-rate or Variable interest rate
Another characteristic of mortgage interest to consider is either Fixed rate or Variable rate.
Choosing one of the other influences the total amount you pay each month, and the amount you’re paying towards paying down the principal balance versus the interest potion.
Fixed interest rate as the name implies, calculated a fixed percentage amount throughout the Term of the mortgage. This offers stability and predictability to borrowers on their mortgage payment amount.
The variable interest rate fluctuates according to the bank’s Prime rate. The Term mortgage dictates the percentage in relation to it, for example, Prime-0.5% or in some cases Prime+1%. Notice that “Prime” refers to the bank’s Prime rate, which can change to be higher or lower than the time when you signed the mortgage contract. The benefit of a Variable interest rate is historically lower interest rate than the Fixed interest rate counterpart, most of the time.
Speak with a mortgage broker today to determine which one is the best interest rate for your financial situation.
Frequently Asked Questions on Mortgage Interest Rate Shopping
How long can you lock in a mortgage interest rate?
The truth is that it depends on the lender. As a general rule, most lenders will lock rates 30-120 days before loan funding. Most banks will honour a lower interest rate if it drops during the lock-in period, but they do not have the obligations to do this. You might want to check with your mortgage broker to look out for dropping interest rates so you can take advantage of it. Remember that you are locking in the interest rate, but the lending terms are subject to change until after proper appraisal has been completed.
What is the best way to lock in mortgage rates?
Lock in mortgage rates when you are planning to buy a house. As the mortgage rates change almost every day, you should lock in the exact interest rates before making your final decision. To lock in the mortgage rates, you will need to get pre-approved by the lender you want to lock in the mortgage rates within 120 days of getting your closing day. This is best done in coordination with a mortgage broker.
Work with Jermaine Hinds - Mortgage Broker | Matrix Mortgage Global
Matrix Mortgage Global (Lic. #11108) has access to over 100 different lenders. Not only will we compare interest rates to get you the best deal possible, but we also compare terms and help you understand those terms. You have access to a wide range of lending partners who are ready to offer you various mortgage solutions, including mortgage renewals, refinancing, second mortgages, home equity loans, bridge loans, and other specialized mortgage products.
Jermaine Hinds, Mortgage Broker Offers Personalized Solutions for Home Buyers and Homeowners
Jermaine Hinds, Mortgage Broker believes in delivering results to clients with their best rate and solutions possible. He has built his reputation around helping people and getting them mortgage financing that fits their situations for the long term. The collective knowledge and experience from Jermaine and his team will help you achieve generational wealth through real estate.
