Mortgage Interest Rates - One of the first things a borrower wants to know is what mortgage interest rate the lender has to offer. And for the fact that many want the lowest interest rate. Okay, it's all human nature. But what's missing?
It certainly can be a balancing act when you are trying to get the lowest interest rate when your main focus should be about your actual mortgage payment. One of the first questions that should be asked is what kind of mortgage payment you would be comfortable with, or at least a range. I have been criticized by a few loan officers in the past for asking this as one of my first questions. But believe it or not, about 95% of the buyers that I speak to, already have a quick idea. This shows that they have been pro-active in their thinking and not trying to buy the most house that they can afford on paper.
A quick lesson in mortgage interest rates. Sure, the lower the rate, the lower your mortgage payment. But should it really matter if you tell me that you are comfortable with a $2,500 mortgage payment and I tell you that your interest rate is 10%? Sure, it would mean that you could only buy x,y,z house, which would be less in price. But your main focus was on the payment that you are comfortable with.
In my opinion, mortgage interest rates can play a mind game in several ways.
Many people in our industry have been told to rate shop. Too many people get hung up on trying to get the lower rate. Sometimes in your mind, a lower rate means that you can afford that payment. When in reality, you should start with what payment you can afford.
Another issue is that some consumers try to out do their neighbors and friends. It becomes bragging rights, in regards to who got the best deal. Unless you both pull out your credit reports, you HUD-1 settlement sheet (to see how much you paid for such rate), and bought the exact same house; this still won't tell you who got the best deal.
The end result - The mortgage payment is what will be applied towards your house. The interest rate just makes up your mortgage payment. And make sure that you have your finances and credit in order to obtain the better interest rate.
Remember, each borrower is different. There is not one person out there that will ever have the exact same scenario as the next. And 2 months down the road, who can say that the rates would be the same.
ADVICE : Trust the professional that you decide to go with. Always ask questions and if you don't understand something, don't hesitate to ask. "No question is a bad question."
APR vs Interest rate - Understand the real difference here when shopping for a mortgage.