About Rates

Knowing how to get the lowest possible rate and the price of your loan starts with understanding a few key factors that go into estimating your pre-approval.

Interest Rates

Interest is what it will cost you to borrow money. Interest rates can change hourly, daily, and even weekly. Interest rates also vary depending on the different types of mortgages and the amount you are borrowing compared to the value of the home. If you are the first or second homeowner that can also make a difference on your rate. Other factors that come into play can depend on your income, credit history, credit score and your employment history.

Mortgage Types

Fixed-rate Mortgage

A fixed-rate mortgage basically means that you have the same interest rate for the life of your loan or mortgage. This can only change if you decide to refinance or sell your home.

Variable-rate Mortgages

An ARM, short for “adjustable rate mortgage” or “variable-rate mortgage,” is a mortgage where the interest rate is variable, it can change within the life of your mortgage. In the beginning, the rate is fixed for a specific timeframe, this is called the “initial rate period”.

It will later change based on the interest rate index, usually in response to changes in the Treasury Bill rate or the prime rate. The rate adjusts to bring the interest rate on the mortgage in line with market rates. The borrower is protected by a maximum interest rate (called a ceiling), which can reset periodically. ARMs usually start with better rates than fixed rate mortgages.