Interest Rates For A Home Loan
Interest rates for a home loan are of prime importance to buyers who want to save money over the entire payback period. A low rate can mean big savings for homeowners who plan on paying off a 15, 30 or even 40 year loan. Buying a house is the most important purchase that many people will make in their lifetime and making the most out of their hard earned money is uppermost in their minds. "A good man leaveth an inheritance to his children's children..." (Proverbs 13:22) What many consumers fail to realize, is that the type of mortgage they apply for can be as important overall to successful financial management than merely low interest rates for a home purchase.
Many lending sources offer various mortgage terms that be customized to fit just about anybody's budget or credit limit. The most typical mortgage approval for most consumers is for a 30 year term. Many lenders have extended the possible terms and now offer a 40 year mortgage for those who may not have the budget to buy a home under any shorter terms. Many consumers end up overextending themselves by purchasing too much house and lose money either through paying high interest rates for a home or eventual forfeiture of property. Unfortunately, these are not such extreme cases within the banking community since many people have not realized the importance of good money management within their own households.
For those who seriously attempt to manage personal finances well throughout the course of their adult lives, interest rates for a home as well as terms are very important. Interest rates for a home loan application are often affected by the particular financing terms which make it difficult to separate the two issues. Also, there are other factors that affect what rates are offered to certain buyers based on personal credit history, income, current debt and the amount of a down payment. The shorter the repayment terms on a loan, generally the lower the interest rate is for most buyers.
However, more and more buyers are overextending themselves by choosing financing terms that reach as far into the future as possible in order to purchase a more expensive home with low, monthly payments that they can afford. When this route is taken, the buyer usually ends up losing a lot of money in overall payments in the long run. Many consumers have taken the middle of the road approach to better money management regarding mortgages by choosing 15 year terms that will position them much better for the future. This approach may take a bit more fiscal discipline, but it can amount to huge savings through low interest rates for a home.
If a buyer purchases a home for a term of a 15 year payoff schedule, he or she can save almost a third of what they would if they chose a 30 year term. For example, if a homebuyer receives a mortgage for approximately $100,000 for a 30 year term at 7%, the lender will end up receiving around $150,000 on top of the principle at the end of the payoff period. There are ways to save some money even if under the terms of a 30 year agreement, such as paying one extra payment a year for the duration of the payoff agreement. It may not sound like much, but in the scheme of things, a homeowner can save around 8 years of payments in doing this.
In reality, interest rates for a home loan will only be paid on the first 22 years. The savings will be significant and equity will accrue more quickly in the house and property. Probably the best option for a standard mortgage is a 15 year loan that provides a real opportunity to save money while building a large investment in a house. Qualified buyers can receive a lower interest rate on most typical 15 year loans than on a longer term loan. The monthly payments may be a bit higher than a 30 year mortgage, but the savings will be significant.
There are several other advantages to choosing a 15 year mortgage over a 30 year term such as quicker equity buildup, savings of at least half the interest, and a homeowner can claim full ownership in half the time. Fixed interest rates for home loan financing during a 15 year period also provides assurance that rates will never change throughout the payoff period. While it may seem a bit harder for many people to bring themselves to choose a 15 year mortgage rather than a 30 year, such things as the savings on the interest rates for a home loan of this type more than pays for itself.
For those looking to have their house paid off before the kids go to college or well before retirement age, a 15 year mortgage plan may be the most sensible way to purchase a home. For those who have been tied up in a high interest, long term mortgage, it is never too late to shop around for the best interest rates for home refinancing. Sometimes refinancing at lower interest rates for a home loan can provide real savings that can get a homeowner back on track. It is never too late to do something about saving money and planning for the future by readjusting financial priorities.
Interest Rate For A Mortgage LoanThe interest rate for a mortgage loan has continued to show stability as the economy continues to show steady growth. The interest rate for a home equity loan is also at a steady place, but has moved slightly higher as the prime rate continues to gradually rise with the good news of strong economies. What determines the amount of percentage charged to a lien for a home is largely driven by current news and forecasted news about the over-all economy. However, there can be a great difference between second, or equity loans, and first, or initial mortgage loans. To get the best options with different lien types, consumers may want to indulge in a quick education course about what determines the percentages or points that are charged to a lien. Getting the information about the future of rates can help consumers make choices about when to buy a house or when to get money out of the house they already own.
A secondary lien on a property will usually be tied to the prime percentage that is nationally followed. First lien mortgages are primarily driven by the bonds markets. While both lien types have stable movement at this time, the difference in percentage points between the two can be significant. Even though the last few years have yielded steady growth, the uncertainty of the tragedy surrounding 9/11 caused the economy, just a few short years ago, to experience insecurities, which led to a drop in interest rates. The following is more information on how the percentages associated with housing liens work.
Ten year bond yields will drive the interest rate for a mortgage loan up or down. When bonds are selling, percentage points will rise. When consumers are buying bonds, the percentage charged to a lien will fall. Bonds are indicators of how consumers feel about the economy. When the current economic status seems unstable, people buy bonds which are safe investments. When the economic conditions seem strong, people sell their bonds and invest in the riskier stock markets. The prime rate drives the interest rate for a home equity loan. Because an equity loan is actually a second mortgage, the lien is seen as riskier, and is therefore subject to the projections or outcomes of the national prime. First things are first, and second things are second, and when there is a default on a lien, first lien holders get the house.
Another interesting aspect about economic driven percentage points involves economic rumors. Specialists in the field report that even the rumor of a drop in the prime rate can cause lenders to drop their percentages before the actual points are reduced. This indicates that the media has significant effect on how people perceive the market and the economy. Reports of good economic growth can keep people spending their money and investing in homes. Reports of high unemployment numbers and slow growth can result in conservative spending. Some housing market researchers have even indicated that much of what happens to the economy is emotionally charged or driven.
Basically, whether to buy, upgrade, or even take equity out of a property will largely be dependent upon personal circumstances. While some seasons prove to be great times of investments, the economy eventually circles, ebbs and flows. An evaluation of personal income, future income, and current expenses will help in determining if this is truly a good time to borrow money to purchase personal property or investment properties. A good interest rate for a home equity loan and the current interest rate for a mortgage loan can make some liens for purchasing properties look like attractive offers. But, again, personal financial situations should always be the determining factor.
It can seem at times that current economic conditions demonstrate the necessity to invest now, or buy properties now. But, God is not controlled by economies or bonds markets. All things work out in His timing, when we turn our desires over to Him. The Bible teaches us to never make decisions in haste, to wait upon His timing for all circumstances in our lives. "Lead me in truth, and teach me: for thou art the God of my salvation; on Thee do I wait all the day." (Psalm 25:5) We are called to turn not just or spiritual matters over to the God of our universe, but we are called to also place our finances into His hands and sovereignty.
To found the current interest rate for a home equity loan and the current interest rate for a mortgage loan, speak to a broker or conduct a search online reading various articles and economic reports. The Internet serves as the ultimate library and source of information, so utilize this valuable tool and get the information needed to determine if borrowing money for a home or investment is the right decision at this time.