What You Need To Know About Home Mortgage Rates

Posted by Lorraine Ross on December 26, 2007

“Global thermal nuclear war” doesn’t cause as many shivers to homeowners as does the words “home mortgage rates”.   At least with global thermal nuclear war, you don’t have to worry about foreclosure.  But if you want the joy and freedom of owning your own home, you are going to have to face your home mortgage rates phobia, unless you happen to have hundreds of thousands of dollars in cash lying around.  Other more frightened and dumber people (like me) have figured out about home interest rates.  So can you.

The Nitty Gritty

Just so we’re all on the same page, I’m going to define just what home mortgage interest rates are…no, wait, I have to keep your attention somehow.  Okay, let’s go with this definition – “Home mortgage rates are what determines how much and how quickly you have to shell out to pay back your mortgage.”

A mortgage is more complicated than a loan, even a home loan.  You are liable for more things.  And all the paperwork for a mortgage is usually on file at the local courthouse.  Be sure you know that you’re getting a “home mortgage” or a “home loan”.

Home mortgage rates are kind are so affected by the stock market, they might as well be stock.  Like stock, their shares costs can change vastly from one day to the next.  Home mortgage rates are usually shown in percentages, kind of like how much interest you would pay on a credit card.  Home mortgage rates are different for each town.  Keep an eye on the “trends”, which are more than educated guesses about how the home mortgage rates will go over a month or two.  You do have the option with most brokers or lenders to “lock in” a certain rate while you are getting approved for a mortgage, which can take weeks.  The rates might not be so good then.

You can, of course, hire a broker to negotiate and pick a mortgage for you, but if you know a little about home mortgage rates, they can’t pull a fast one on you…not that they would, but…

Fixed Or Adjustable

There is an alphabet soup of names for all the different types of mortgages available.  But most fall into two categories – fixed or adjustable.  Fixed means the interest rates are pretty much the same throughout the entire length of the mortgage.  These are also called conventional loans.  This is generally thought to be the safest kind of home mortgage rate there is, especially if you plan on living in your prospective home for the rest of your life.

Adjustable rate home mortgages are just that – the interest rate on how much the mortgage is keeps changing.  This can have its advantages and disadvantages.  Often the payments for the first year or so are small, and then explode according to the current home mortgage rates and the stock market.  Although it is theoretically possible to pay less than a fixed rate mortgage, it doesn’t always happen.  It is a gamble.