Purchasing a home can be unbelievably exciting, but it can also be extraordinarily complex. It’s the polar opposite of simply going into a store, picking out what you want and paying for it. Instead, there can be a lot of moving parts from the moment you sign the initial contract to when you leave the closing table with your new set of house keys in hand. But before you even reach the closing table, it’s easy to get overwhelmed by terminology like amortization, exculpatory clause, lien and underwriting. To help you navigate those terms and stay on top of any moving parts, you’ll want to partner with a skilled mortgage company, like Mortgage Atlanta. The biggest moving parts we can help you contend with – one that will have a direct impact on your monthly mortgage payments – is your mortgage rate.
In its simplest terms, a mortgage rate is the rate of interest charged on your mortgage. For many homebuyers, it’s one of the most important financial elements of any home purchase – second only to the purchase price. The rate of interest is determined by shifts in the interest rate market and the lender, since they are the ones who will assume a certain degree of risk when issuing a mortgage loan. That risk not only lies in the fact that a mortgage is one of the largest loans American homebuyers will assume over the course of their lives, but in 2021, the delinquency rate of 30 days or more in the U.S. stood at 4%. Out of an estimated 83.48 million owner-occupied homes in the U.S., that’s roughly 3.3 million households that were either behind on their mortgage payments or in default altogether.
Lenders will look at things like financial history, credit scores, down payment, purpose of purchase and loan type to determine their risk in extending a mortgage loan to you. The higher the risk, the higher your rate of interest is likely to be. If you know you are relatively low risk because you plan to put down a down payment of well over the traditionally required 3-5% and you have an excellent credit score, you know you will likely qualify for one of the lenders best interest rates.
There are two basic kinds of mortgage rates available to homebuyers: fixed and variable. Fixed means it remains at that amount for the length of your loan, while variable means it can fluctuate from a benchmark interest rate – rising and falling at predetermined intervals in step with market interest rate cycles. The kind is often tied to the loan type you opt to pursue, i.e., 30-year fixed rate mortgage, 15-year fixed rate mortgage or an ARM (adjustable-rate mortgage), just to name a few. While variable mortgage rates can be a bit riskier, many homebuyers are attracted to them because they tend to boast lower interest rates, depending on the market. However, in a volatile market, they can fluctuate wildly. With many lenders, you have the option to create a hybrid “fixed-variable” mortgage. Terms like 3/1, 5/1, 7/1 and 10/1 ARMS mean that the first number is an indicator of how many years your rate of interest will remained fixed, and the second number indicates how often your rate can shift each year until the loan is paid off.
There’s a very good reason why “mortgage rate today,” “current mortgage rate” and “30-year mortgage rate” are such popular search terms among homebuyers. A 7% mortgage rate can mean the difference between being able to afford the home of your dreams or not. The Mortgage Atlanta mortgage calculator can prove an invaluable tool when trying to determine what your monthly mortgage payment might be. We encourage you to check with your Mortgage Atlanta Loan officer on what rates you might qualify for and then plug them in along with the purchase price, down payment, loan terms, estimated annual taxes, estimated annual insurance, and monthly HOA (you should be able to find most of this information on the MLS listing for the home you hope to buy.) This practice will give you a great snapshot of whether or not the home fits into your desired budget.
Mortgage Atlanta will work diligently to find the best loan – as well as the best mortgage rate – to fit your needs. Given the current volatility of the market, we will likely recommend a fixed rate mortgage. If rates drop drastically in the not-so-distant future, we can always consider refinancing your mortgage at that time. We will lock in your rate between 90 to 30 days before your mortgage loan closes – hopefully landing on the lowest rate available during that time period. Some lenders offer a float-down option, so if interest rates drop below the lock-in rate before you close, you may be able to “float down” to that lower rate.
We get it… it’s a lot! If your head is swirling with all the information presented above, you can always lean into our expertise and let the mortgage professionals at Mortgage Atlanta worry about the rest. Whether you simply have more questions or you’re ready to discuss the best mortgage loan and interest rates for your unique situation, we invite you to call us at 678.564.1522 or shoot our Senior Loan Specialist and Company President, Brian Berman at note at bberman@mortgage-atlanta.com. To learn more about Mortgage Atlanta and our capabilities, visit www.mortgage-atlanta.com.
