A Guide To Home Mortgage Rates
Home mortgages are loans taken to buy a property, for which the property is used as collateral. Owning a home is a big and usually a one-time investment for many. With increasing real estate prices and decreasing interest rates on loans, many people use home mortgage loans to buy property.
Home mortgage rates are the rates of interest that are to be paid along with the capital for taking the mortgage loan. Home mortgage rates do not remain steady over a long period. A lower rate means lower monthly payments, leading to lower costs on the property.
Depending on the interest rate, there are two kinds of home mortgage loans: Fixed Rate Mortgages (FRMs) and Adjustable Rate Mortgages (ARMs).
- FRMs are mortgages for which the interest rate remains unchanged for the entire loan period. These can be for 10, 15, 20, or even 30 years. On the other hand, adjustable-rate mortgages have fluctuating rates of interest. This is ideal when there is a likelihood of the rates decreasing.
- ARMs are preferred by people who plan for shorter periods. ARMs are offered at lower rates than FRMs to attract customers, but they also contain a certain level of risk. The fixed-rate mortgages are a very predictable, safe option.
Mortgage rates fluctuate based on an economic index. The mortgage bond market works according to a process called securitization. This securitization enables the creation of more loans and greater mobility of funds by keeping the mortgage rates low and allowing more credit for ideal customers.
The best source for knowing about home mortgage loan rates is the Internet. Most home mortgage loan companies provide information through their websites also. These rates are updated daily. Their sites also have easy-to-use home mortgage calculators that give all information, including payments to be made each month and the tax advantages, with the single click of a button. Most of them also have financial advisors who would provide advice online or over the phone.
A professional mortgage lender could provide accurate information about the mortgage loan rates as and when they are applicable.