When it comes time to buy a home, you’ll typically work with a bank or mortgage lender to finance your loan following your down payment and closing costs. Homeowners agree to pay their mortgage loan amount back with interest. However, a lot goes into your mortgage interest rate that you need to understand as a homebuyer.
Homebuyers have many options available to them, but it can quickly become hectic when going at it alone. If you consider working with a mortgage broker, they can help navigate the many options to determine which is the best for you. As the best mortgage broker in Kansas City, First Fidelis is dedicated to understanding your needs to find a loan with the mortgage interest rate that works for you.
What is a Mortgage Interest Rate?
Your mortgage interest rate is how much extra you pay to your lending institution to finance your home. Expressed as a percentage, your mortgage rate is added to your monthly mortgage payment until your loan is completely paid off. Put simply, your mortgage interest rate is extra compensation to your lending institution while you continue to pay your loan back.
Your mortgage rate can vary depending on many different factors. Your credit score, loan amount, and the loan program you choose can all drastically affect your mortgage rate. If you are ever confused about how the interest rate can affect your home loan, a mortgage broker is a useful resource. At First Fidelis, we take the time to make sure our clients understand their home loan and mortgage rate before closing.
Fixed-Rate or Adjustable-Rate Mortgages? What’s the Difference?
There are two types of mortgage loans to understand before buying your home: fixed-rate and adjustable-rate mortgages. The mortgage brokers at First Fidelis can help you decide which type of loan works best for you. One is not inherently better than the other, as both mortgage loans offer unique benefits and options for your mortgage rate.
Fixed-Rate Mortgage Loans
Fixed-rate loans make up a majority of the home loans available. Homeowners like fixed-rate loans because the monthly amount due stays the same for the entirety of the loan term. These loans are seen as a “safer” option for home buyers, as they know exactly how much is due every month, making budgeting much easier. Throughout your loan’s lifetime, your mortgage interest rate will remain the same.
Adjustable-Rate Mortgage Loans
Some homeowners choose an adjustable-rate mortgage (ARMs) for their home loan. Once you sign on for an adjustable-rate mortgage, your mortgage rate is often slightly lower than a fixed-rate mortgage. After the first few years, however, the mortgage interest rate on these loans can vary each year and are subject to change without notice. Buyers who plan to sell their home within the first few years tend to choose an ARM for the lower mortgage rates available.
When deciding between a fixed-rate or adjustable-rate mortgage, First Fidelis’ team of licensed mortgage brokers compares mortgage loans from different lenders to find your perfect loan.
How Are Mortgage Rates Calculated?
Lenders typically calculate mortgage rates on a case-by-case basis, based on both economic and personal situations. The economic factors, like the strength of the economy, federal reserves, and rate of employment, influence what lenders can provide at any given time. However, your lender will also look at your personal financial situation when calculating your mortgage interest rate.
When discussing your mortgage rate, your lender will check your credit score and credit history. Your down payment, the location of the property, and your debt-to-income ratio will also be considered. The loan size, type, and term you decide also impact what rates your lender can offer. For example, a 15-year fixed loan will typically have slightly higher monthly payments than a 30-year loan, since the loan will be paid off much faster.
Getting the Best Mortgage Rate for You
When it comes to your mortgage rates, it’s important to understand what loan will work best for you and then find it. Buying a home is one of the biggest financial decisions most people make, and it shouldn’t be taken lightly. While many factors affect your mortgage rates, your lender is the biggest one.
As a mortgage broker, First Fidelis can find you the best mortgage rate from a reliable lender. Our team of licensed mortgage brokers understands your financial situation and sources hundreds of mortgage loans to find the one that fits your needs. With many mortgage options to choose from and our expedited approval process, we’re able to close your loan within 30 days.
The mortgage brokers at First Fidelis are licensed in Kansas, Missouri, Mississippi, Arkansas, and Florida. We’ve helped families all across the country find the right mortgage loan for their next home. Call us at 913-205-9978 to schedule your appointment today.