Best Fixed Rate
The best Fixed Rate refinance is not always going to be the quote with the lowest rate. When refinancing an adjustable rate mortgage, or ARM loan, to lock in a low fixed rate, a variety of other factors are significantly more important than rate alone.
When comparing potential sources of financing, remember that many lending institutions considered household names employ rather unscrupulous "bait and switch" tactics with alarming regularity. By quoting you the best rate, they hope to lock you into a process both financially and emotionally with the hope that by the time they give you the real rate, often at the closing table, you will be too exhausted and afraid to explore your options. Comparing Good Faith Estimate documents is also next to impossible because lenders with something to hide know you will do this. There are a variety of methods by which the costs of an unrealistically low rate can be concealed on a Good Faith Estimate, and it is after all only an estimate, and can be changed with no enforceable penalty at any time.
Choose a firm which you feel represents your interests, whose good faith is more than just a piece of paper, and you will be assured to find the best fixed rate with the best features and terms for your familys financial situation.
When choosing a Fixed Rate loan, take into consideration how long you plan on being in the home. If you plan to stay there without intention to refinance for a couple of years, take a loan with a pre-payment penalty. Mortgages which carry a pre-payment penalty usually carry a lower interest rate. Since you won't be selling or refinancing inside of the penalty anyway, it is a benefit to you for a lower rate.
When looking to get the best fixed rate, always remember that everyone lends from the same pool of money. One mortgage lender may offer the best fixed rate but the costs may not be favorable. Another mortgage lender may offer a higher rate but the costs may be significantly lower.
Obtaining the best fixed rate, for example on a 15 year fixed rate mortgage, should not compromise your ability to consistently make the higher payments required of the loan. Mortgage companies can qualify you for payments which are much higher than you can truly afford, and do not account for any unexpected disruption of your income due to a break in employment, illness, or family emergency. While minimizing interest expenses is important, obtaining payment flexibility may be significantly more important to you, and may help you prevent an unforeseen future event from ruining your credit, bankrupting you, or even losing your home to foreclosure.
If you are currently in an adjustable rate mortgage, you should certainly consider contacting me at 415-617-5448 within a month or two of the scheduled adjustment. You will likely be surprised to learn how much your mortgage payment is set to increase. Together, we can analyze your situation and prepare the best fixed-rate mortgage refinance plan.
A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or "float."
There are other factors affecting your payment besides the intrest rate. For example if your loan requires that you carry Personal Mortgage Insurance (PMI), these payments would be added to your monthly payment amount until this mortgage would no longer be necessary. This is normally when you acquire 20% equity in the home.
Fixed rate mortgages are available in terms from 10 to 40 years. By choosing a program with a shorter repayment term you will receive a lower interest rate. Even with a lower interest rate your payment will be higher with a shorter term mortgage. Take everything into consideration when choosing interest rate and mortgage programs.
In a normal economic environment, Fixed Rate Mortgages (FRM) have interest rates that are 1% to 2% higher than that of Adjustable Rate Mortgages (ARM). However, when a slow or declining economy is expected and the interest yield curve is inverted, Fixed Rate Mortgages may have interest rates about the same as those offered by Adjustable Rate Mortgages.