MORTGAGE RATES » Home Mortgage Loan News

What is the best fixed rate mortgage for you? The answer to that question will be determined by your own special circumstances and needs. Are you refinancing your home to a better rate? Are you a first time home-buyer? Are you taking out a second mortgage to fund a special project, such as a home improvement? In each of these cases you will find that different mortgage terms might be the best choice for you.

The two most popular types of fixed rate mortgages are the 30 year fixed rate mortgage and the 15 year fixed rate mortgage. Other types of mortgages (for instance, 10 or 20 year mortgages) are also available, but in the United States, 15 year and 30 year terms are more common.

The main advantage of a fixed rate mortgage is that it allows you, as the borrower, to predict your future monthly payments in an accurate manner. Because the interest rate remains the same, your payments will be consistent and you wont experience large variations in the amount you are required to pay in monthly mortgage payments. You will pay the same amount through the entire life of the loan.

The main disadvantage of a fixed rate mortgage, as opposed to an adjustable rate or other type of mortage, is that your interest rate may be slightly higher over the fixed term. That is because the fixed rate offers you the security of knowing your payment will remain the same. You are not incurring the risk of market fluctuations in interest rates.

Finding the Best Fixed Rate Mortgage

To get the best rate on a fixed rate mortgage, its advisable to shop around and do your homework. Get quotes from several lenders and dont simply depend on one source. If you are a member of a credit union or other member-owned lending institution, be sure to get a quote from them as their rates can often be substantially lower than traditional banks. A skilled mortgage broker may also be helpful in finding you a good rate on a fixed rate mortgage. Ask your friends and associates if they can recommend an honest broker.

If you have filed a Chapter 13 or Chapter 7 bankruptcy, the bad news is that this filing will remain on your record for seven to ten years. However, if you are a homeowner, the good news is that this does not necessarily mean you will be unable to refinance your mortgage for that entire time. It is possible to refinance your mortgage within a year or two after declaring bankruptcy. The offers will likely get better as you get further and further away from your bankruptcy, but there are other factors which will improve your chances of getting your refinancing loan approved, and getting the best interest rate.

One factor which lenders will look at when you are refinancing your home is the amount of equity you have in your home. If the purpose of your refinance is to get a better interest rate, and you are not attempting to access your home equity with a cash-out refinance, lenders will tend to look upon you as a better risk. They will see the bankruptcy in your past, but they will also be looking at the Loan to Value Ratio of your house.


Loan to Value Ratio

The Loan to Value Ratio (LTV) refers to the difference between the market value of your home and the amount of money you still owe on your mortgage. For example, if your home has a market value of $350,000 and you owe $200,000 on your mortgage, you have $150,000 in equity in your home and your loan to value ratio is high. What this means is that in the event that you default on your loan, the lender is very likely to get their value back on the property, because the property is valued well above what is owed on the mortgage.

Rebuild Your Credit

It is also advisable to do what you can to rebuild your credit before shopping for a refinancing loan, just as you would when applying for a primary mortgage. If you pay down your debt, establish a history of on-time payments, and build your income - all of these measures will help to improve your credit score and help you qualify for the best interest rates.

Credit scores, or FICO scores, are one of the primary tools used by lenders to try to assess the likelihood of your default on a loan, and whether you will make timely payments if they extend credit to you. When you apply for a mortgage loan, one of the main things a prospective lender will look...

The term Sub-Prime might suggest an interest rate that is below the prime rate of interest. However, the opposite is true. Sub-prime mortgage loans are a class of loans that are offered at a higher rate of interest than the prime rate, to borrowers who are unable to qualify for lower-interest...

So, you are ready to purchase a home and you are looking at your financing options. A question that is probably in the forefront in your mind is - what should I look for in a mortgage lender? In todays market, you will want to make sure you are dealing with a stable and trustworthy lender. After...

A missed mortgage payment can become very serious if it is not addressed quickly . If you are late on a payment, there is usually a 15 day grace period in which you can still make the payment without incurring late fees or being reported to a credit bureau. However, once you are 30 days past due,...

Loan amortization is basically a fancy term that refers to the process of paying back your loan through regular payments over time. Your amortization schedule is simply the schedule of payments that must be made to pay your loan off within its term at its rate of interest whether that term is...

When you are applying for a mortgage, part of the approval process will require that you present documentation to the bank to support any claims you have made about your income and your readiness to assume the loan. Even if you have been pre-approved by a lender for a loan, you will still need...

So, let's assume you are a renter who is considering a first time home purchase and you are weighing the pros and cons of renting vs. buying. You've probably heard the commonly held belief that it's better to buy a house and build equity than it is to throw your money away on rent. But in...

Homeowners in their golden years are finding themselves cash strapped, but with a major amount of equity in their home they can benefit from the new Federal housing laws affecting reverse mortgages . The policies have lowered the fees seniors pay to obtain these types of loans as well as raise...