Best Mortgage - The term "best mortgage" is a relative term that depends on each homeowners unique situation. If you are currently shopping for a new home mortgage, your best mortgage may be different than what your neighbors best mortgage is.
The best mortgage around is one that gets you into a situation that suits you in the best possible manner for the particular situation you are currently in. Make sure your loan officer knows exactly what you want and how quickly you want it.
Even if you were only able to get a mortgage you feel was not the best keep in mind that your mortgage situation can always be improved after you get into your home. If you have low credit scores they should rise greatly with timely mortgage payments. You will then be able to refinance for a better rate.
Your loan officer should discuss your options with you, so that you can give your opinion on what loan you think is right for you. Remember, it's your decision. If you disagree with the loan officer on what loan is right for you, then you still have the right to the loan program that you desire.
Many rates advertised in print, such as the daily newspaper, assume you have perfect credit and at least a 20% down payment. Anything less then the " perfect borrower " may result in a higher interest rate.
In order to have the best chance to qualify for the best mortgage you possibly can with the best interest rate available, you need to demonstrate many things. A great credit score, a down payment (the higher the down payment the better), liquid assets, good payment history on your mortgage or rent, established credit, a stable employment history, and a low debt to income ratio are just a few of the items that you need to display through your loan and credit application for a mortgage loan.
Most people believe a 30 year fixed rate mortgage is the best mortgage option. This may be true for some, but not for people who plan to live in their home for 3-5 years. A 5 year adjustable rate mortgage (ARM) is a better choice for them because of the lower interest rate. Since each persons goal is different and there are many mortgage programs available, you should contact a mortgage professional to analyze and assist you with your goals.
Mortgage Rate - The mortgage rate is the rate in which the repayment terms of your mortgage are based upon. There are hundreds of different loan programs, and each one has unique mortgage rates attached to them.
Mortgage rates can be both fixed and variable rate. A fixed rate will never change over the life of the loan. A variable rate changes over time and is normally tied to one of many indexes.
Your mortgage rate is determined by the amount of risk you represent to the lender. If the lender sees you as more likely to default on your loan, you will receive a higher interest rate than if you are considered a 'safe' borrower.
The more equity you have in your home the less risk you will generally be to the bank and the better the interest rate should be that you will qualify for. One reason for this is the more invested you are into your property the more you have to lose and the less the bank has to lose. When you owe a bank the full mortgage amount that your home is valued at, this is when you will see higher interest rates for your personal home loan.
Mortgage rates are often based on an Index and a Margin. An Index is a regularly published rate that can be based on several different market indicators. Common Indexes are PRIME, MTA, COSI, COFI, and LIBOR. The Margin is the portion of the rate that is added on by the lender.
Every margin has good and bad factors about them. Ask your mortgage broker for a recommendation of what index is better for you.