It’s out there, the house of your dreams. And quite possibly, it is the first time you are buying a home. Consider this Mortgage Rates 101.
“Mortgage rates vary from lender to lender, so you’ll want to compare current mortgage rates,” said Wendy Kurosawa a CPB Homeloans consultant. “Ask each lender what its current mortgage interest rates are and whether the rates being quoted are the lowest for that day or week.”
With mortgages, as with many things in life, it’s not “one size fits all.”
“When you start to compare rates, you want to ask if the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable rate loans go up, generally so will your mortgage payment,” said Kurosawa.
You have to know about other “bank” phrases. APR means Annual Percentage Rate and that can figure into the monthly cost of the mortgage.
“Other costs that contribute to the varying APR’s include private mortgage insurance, which is PMI, paid during the term of the loan,” said Kurosawa.
There are other mystical terms when it comes to buying a home, especially if you’re a first time home buyer. You will hear about “points.”
“Points are fees paid to the lender for the loan and often linked to the interest rate. Usually the more points you pay, the lower the interest rate will be,” explains Kurosawa. “So for example, two points charged on a $100,000 loan would equal to $2,000.”
Her “point” is, the more money you pay up front, the lower the monthly mortgage will be, whether it comes to points or a down payment. If you are a first time homebuyer, it’s probably a good idea to talk with a home loan consultant.
(Donna Hansen, Karen Leach, Khon2, Maui News)