How does the interest rate factor into securing a mortgage loan?
A lower interest rate allows you to borrow more money than a higher rate. Interest rates can fluctuate as you shop for a loan, so ask-lenders if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the interest rate because it also includes the cost of points, mortgage insurance, and other fees.
Simply put, the lower the intrest rate the lower your house payment OR the more money you can borrow. Be sure to check with us frequently and request when you feel the time is right or when we recommend that you “lock in” a particular rate. Intrest rates are constantly fluxuating. A few years back, depending on the loan type and length, they were as low as 4.5% or so, currently they’re hovering in the low 6% area and seem to be stablizing. Historically speaking, this is a VERY good time to be shopping for a mortgage and a house. In the 1970s, rates were in double digits and that was a very diffucult time to borrow money. You’d be surprised at the amount of money you can borrow if you have a decent credit rating.
