Top 3 Mortgage Rate FAQs
At Get A Rate, we are proud to offer education on mortgage-related topics because we believe that information helps our clients make the best decisions when it comes to achieving their dreams of affordable homeownership.
So we’ve compiled some of the mortgage rate questions that clients ask us all the time and shared the answers below:
1. Should I choose a Fixed or Adjustable Rate for my mortgage?
The answer to this question can vary based on your home loan goals and current financial situation, but in most cases, there are some general rules that can help answer this question:
Fixed Rate Mortgages
These are great for when mortgage interest rates are very low.
It makes more sense financially to lock in one rate for the life of your loan when you know that rate is going to be quite low. (More about “Rate Locks” in a little bit)
Adjustable Rate Mortgages
The adjustable rate mortgage is better suited for borrowers who don’t plan on living in the home they want to purchase for a long time.
An adjustable rate can also work in the borrower’s favor if rates are predicted to drop even further in the future.
To compare different loan option benefits, we’ve created a chart of the 4 common benefits of each loan in an easy to understand loan options comparison chart.
2. What’s a Rate Lock & When Should I lock my rate?
Great question! When a borrower locks in a rate, that means they are guaranteed that rate for a specified period of time.
PRO TIP: The best time to lock in your mortgage rate is when you begin to see an upward trend in rates.
Once a rate is locked in, even if the prevailing rate rises, your interest rate will remain constant.
Depending on the market, locking in your interest rate could save you a lot of money.
3. How is my interest rate determined?
The mortgage rate you qualify for is affected by a few different factors:
- Your creditworthiness
- Your borrowing risk, and
- Current prevailing rate
All these factors are taken into consideration and evaluated together to determine the mortgage interest rate you can qualify for.
If you have any mortgage rate questions that haven’t been answered above, give us a call with your questions, schedule a call to have one of our Home Loan Experts contact you, or start the process online!