Buying a home is a large investment and it’s important to have a clear understanding of the cost of your mortgage loan. Home shoppers are often confused about the difference between APR (Annual Percentage Rate) and interest rates. When evaluating a mortgage loan, interest rates can tell a different story than APR. It’s important to note that neither is better or worse than the other. If you understand what each represents, then you can make an educated decision on your mortgage loan.
What is Rate Lock? Mortgage rates can change daily, even hourly. When a mortgage rate is locked, it protects the borrower from interest rates rising between the time that the rate is locked and closing. However, because of changing rates and closing timelines, timing is everything when it comes to locking in a rate for a home mortgage. A rate lock guarantees a borrower that they will receive a specific interest rate, at a specific price during a specific time for a home mortgage loan. This protects them from rising interest rates.
Throughout the process of securing a home loan and buying a home, you will encounter a series of costs outside just your down payment. Costs that accrue during the mortgage process and outside of the principal and interest on your home loan are called closing costs.
Mortgage interest rates are inherently variable. They fluctuate based on economic factors, both global and domestic, housing supply and demand for a particular area, and the credit score of the borrower. There’s not much an individual borrower can do to stabilize the national economy. You can be smart about when and where you look for a home and make informed choices about what you can afford. But the major determining factor of mortgage interest rates that you have the most control over is credit score.
With the November meeting of the Federal Reserve not long behind us, people are already looking to the possibilities of the December meeting, scheduled for December 13-14.
The Chris Doering Mortgage team is proud to once again sponsor the Bikers on Parade event taking place in Gainesville, FL on November 6, 2016. By raising funds through sponsorships, biker entries and donations, this event supports local veterans who have put their lives on the line for our freedom.