Mortgage Rates

Home mortgage rates represent part of the cost, or 'price', of mortgages, but it is important to note that a mortgage rate is just that - only one component of the price, to be added to all other costs in determining the total price of a mortgage.

It is also important from a borrower's point of view to make a distinction between quoted mortgage rates and actual mortgage rates. Why is this? Because the rates are almost never the same.

Quoted Mortgage Rates

The interest rates advertised or quoted by mortgage lenders are either the very best rates which they would offer to a prime borrower, or are below those rates (yes, that's correct). They are also today's rates, which are not necessarily tomorrow's rates, as they are reviewed and reset every morning. Consequently the mortgage rates which you read in newspapers are already out of date, and you need to to look to other sources of information, such as live rates online or by directly calling the lender.

When you get to the stage of approaching prospective mortgage lenders for quotes, prepare your strategy for doing so before you make your first contact. Whatever that strategy is, whether you make the approach yourself or arrange someone else to do it for you (such as a mortgage broker), obtain all quotes on the same day so that you can compare apples with apples.

Other Mortgage Costs

The other important components of the cost of a home mortgage, to be added to mortgage rates, include:

The margin;
The points;
The fees.

These components can have as much, and sometimes more, effect on the total price of a mortgage than mortgage rates alone. Always remember to obtain this information from every prospective mortgage lender and to factor them in to any decision which you make.

September 3, 2010