Interest Rates fluctuate daily based on changes in key economic factors. Lenders diligently watch economic activity related to the mortgage market to set their interest rates. Interest rates are currently at historic lows, so, you’re looking at a good time! Keep these things in mind as you’re applying for your loan:
1. Credit Matters- When evaluating your credit, lenders typically look at how many accounts you have, your account balances, and payment history. Your credit score is also a factor, but it’s not the only measure that will determine your interest rate. Lenders will look at the full picture and that’s good news!
2. Product Rates May Vary- Conventional, Federal Housing Administration (FHA), and Veterans Administration (VA) loans can all carry different rates on a 30-Year Fixed Rate mortgage; so, it may be more important to consider the overall cost during the life of the loan to determine which loan best suits your needs.
3. You have options- Fixed rate mortgages have an interest rate that remains the same over the life of the loan. This may be a good option if you plan on staying in the house for several years. The most common loan terms are the 15 and 30-year mortgages.
Unlike a fixed rate mortgage, adjustable rate mortgage interest rates change periodically in relation to an index, and payments may go up or down accordingly. Adjustable rate mortgages usually have a slightly lower initial interest rate than a fixed rate mortgage. Having a good idea of how many years you plan on staying in the home will help you determine which is best for you.
4. You can shop around- You may find or negotiate a lower rate if you compare mortgages from different lenders. For instance, if you find a better rate for your home purchase at a different lender, Navy Federal will match it. And if we can’t match it, we’ll give you $250 after closing*.
5. You can lock it in- Be diligent about watching rates throughout your application process. Once you have completed your application or have a ratified contract to purchase your home, you can lock the rate at any time. If rates are rising, consider “locking in” your rate when you apply. In the case where rates are on the decline, you could consider waiting until 24 hours before you go to closing. The lender will assign your loan that day’s interest rate for a set period of time—usually 30 days. The rate lock for Navy Federal is generally 60 days.
As you think of how your monthly mortgage payment will be calculated, remember to factor in your interest rate. Generally speaking, the lower interest rate you have, the more house you can afford. Consider this example, if rates went from an average of 4.5 % APR to 5.5 % APR on a 30 year term fixed rate mortgage; it could add $122 to the monthly payment on a $200,000 mortgage. Makes a difference, right?
*Special offer available for purchase and refinance first mortgages. Certain product exclusions may apply. Good Faith Estimate (GFE) and Truth in Lending Disclosure (TIL) from competing lender must be dated and received within 3 calendar days of locking your interest rate at Navy Federal. The terms of the competing loan must be identical to Navy Federal’s loan. If the loan does not close within the commitment period, the rate match may be voided. To receive $250, you must provide a signed, executed copy of the final HUD-1 Settlement Statement and a copy of the mortgage note within 30 calendar days of your loan closing with another lender. Offer not valid if original loan terms or conditions change prior to closing. Once approved, $250 will be automatically deposited into your Navy Federal account within 30 calendar days of receiving the necessary documentation
Federally insured by NCUA. Equal Housing Lender.