Almost everyone dreams of owning their own home. Buying a house is a big commitment and could be the biggest purchase of your lifetime.

Mortgages Make It Possible To Buy a House

Most people do not have enough in savings to buy a home, so they make a down payment and borrow the rest.

A mortgage is a legal agreement that allows the borrower to use property as collateral to secure a loan.

With a mortgage agreement, the borrower gets a loan to buy a house and the lender gets the right to take action if the borrower defaults on loan repayment.

Getting the lowest mortgage rates helps reduce your overall debt burden and the monthly payment you need to make.

Factors that Determine Your Mortgage Interest Rate

Knowing what factors determine your mortgage interest rate can help you better prepare for the home buying process and for negotiating your mortgage loan. Key factors that affect your interest rate are:

• Credit scores
• Home location
• Home price and loan amount
• Down payment
• Loan term
• Interest rate type
• Loan type

Types of Mortgages

There are different types of mortgages, and understanding the terminology can help you make the right choice. The most common mortgages are:

• Fixed-rate mortgages
• Adjustable rate mortgages
• Second mortgages or home equity loans
• Reverse mortgages

With a fixed-rate mortgage, you pay the same amount for the entire term (unless you pay more to get rid of debt faster).

With a variable/adjustable rate, your monthly payment varies as the interest rate is not fixed. It varies according to market trends

Choose the Right Lender

Remember that you are free to choose your lender. Shop around, consult a number of lenders to find out what they have to offer before settling on one.

You can get a mortgage at a lower rate if you have a good credit score. If you do not, you can still find lenders willing to finance your home purchase, though the mortgage rate could be slightly higher.

You can shop for mortgages from banks and credit unions, mortgage brokers, and online lenders.

Conclusion

Buying your first home should be exciting. Understand current interest rates, standard closing costs, homeowner’s insurance and property taxes where you wish to buy a home. Also, be realistic about what you can afford.

One way to get the lowest mortgage rates is to make a large down payment. A good credit score can also get you the lowest mortgage rates.

Online aggregators or rate comparison sites can help you zero in on the lowest mortgage rates. Compare rates and terms and select the mortgage that suits your needs.