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Mortgage Rates

Mortgage Rates

Mortgage loan is a loan which is secured by some property through the use of some documentation. These legal documents serve as a proof or basis for the existence of the loan. Every person opting for a mortgage loan looks for the lowest interest rates, so that the burden for repayment will be comparatively low.

There are various ways to repay the mortgage loan. These are based on localities, tax laws and the culture. In US the borrower is required to submit a loan application and the documents regarding the financial history and/or credit history of the borrower. Many banks offer various schemes which require low documentation procedure, but one should be careful as such schemes involve high interest rates. However, one should be careful as these schemes are considered illegal in some states.

There are types of mortgage interest rates, one of which include adjustable mortgage rates. In this type, the interest rates fluctuate with time and market conditions. This can be a risky option as one may enjoy very low interest rates sometimes and many a times it may shoot to high levels. Adjustable mortgage rates include types such as buy down mortgage, graduated payment mortgage and negatively amortizing mortgage. There are also options available for fixed mortgage rates. This option gives planning flexibility as one has decided on a fixed rate.

Apart from the interest rates lenders may charge various fees while granting the mortgage loan. These include the entry fees, processing fees; exit fees, administration fees, and lenders mortgage insurance (insurance to offset loans if the mortgagor is unable to repay the loan.). Settlement costs or the closing fees are also charged. Apart from these, if the loan is applied through a third party or a broker (agent) then that may incur additional charges.

At present the interest rates for a fixed one is around 5%. The figure is low as the housing sector is in bad shape and in order to attract the customers, institutions resort to low interest rates. However, there are predictions that the interest rates will rise by around 1.25% by mid 2010. This means that the mortgage rates will go around 6.25% which will cost the customers thousands of dollars. Hence one should take advantage of this time and avail low mortgage rates.