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National Mortgage Rates 16 May 2012

Loan Type Today +/- Last Week
15 yr fixed 3.06 3.04
30 yr fixed 3.78 3.75
5/1 ARM 2.69 2.72

Rates may contain points

6 Mortgage Basics that You Should Know

By:
JR Hevron - MortgageLoan.com
Results from a recent survey indicate that most homeowners don’t know their mortgage basics. Do you?
 
A recent survey of 1,005 prospective homebuyers by Zillow.com reveals that many people who are about to get a mortgage actually know very little about mortgages.
 
Here’s what the survey found:
  • 46% of the time, respondents gave incorrect answers to very basic questions about mortgage information.
  • 44% of those who participated admitted to not being confident in their knowledge about the mortgage process.
Considering that a mortgage is likely the largest financial investment that you will make in your lifetime—it makes sense to get educated on the topic before you take the plunge.
 
Here are six of the top topics that stumped survey takers along with some helpful information to ensure that you fill in any potential knowledge gaps:
 
1) Lender Fees: 34% of respondents did not know that a lender’s fees are not only negotiable, but that they also vary from lender to lender.
Though in some states lenders have a maximum rate for some fees, the actual amounts are not set and can vary. You can always save money by shopping for the lowest fees and using that information to get a different lender or to negotiate with your lender. This is especially true of credit checks and appraisals which lenders are known to inflate.
 
2) Adjustable Rate Mortgages: 57% of respondents thought that adjustable rate mortgages always reset at a higher rate.
Though it may seem that this is the case, they adjust to the sum of the margin plus index. And in some recent cases, this means that an ARM can reset at a lower rate.
 
3) Buying Discount Points: 45% of respondents believed that you should always purchase discount points when getting a mortgage.
While it seems on paper that lowering your rate by paying upfront is the way to go, you have to look at it long term. It only makes sense to purchase discount points if you plan to be in your home for many years. If your plans are short term, you likely won’t break even.
 
4) Varying Mortgage Rates: 55% of respondents did not know that mortgage rates, like stocks, are always changing and can vary throughout the day.
While many advise that it’s futile to try to play the market to get the best rate, it pays to at least be familiar with the ups and downs of the current market and shop around.
 
5) Pre-Qualifying for a Mortgage: 37% of respondents believed that pre-qualifying for a mortgage meant that their financing was guaranteed.
There is a lot of confusion around the terms pre-qualified and pre-approved. Pre-qualification happens at a very early stage in the mortgage process and just means that the lender has very loosely approximated your finances to come up with the amount that you can borrow. A pre-approval means that the lender has thoroughly vetted your finances and has approved a specific amount for your mortgage.
 
6) FHA Loans: 42% of the respondents did not understand that FHA loans are available to all buyers.
If you’ve got a low to average credit score and less than a 20% down payment, an FHA loan may be your most affordable loan. No matter what your situation, it pays to check to see if an FHA loan is right for you.
 
These basic misunderstandings show that many consumers do not have a firm grasp on mortgages. While the mortgage process can be quite complicated, anyone can easily learn the basics with a few hours of research. After all, a mortgage is the biggest financial commitment that you’ll ever make. It pays to do some homework!

  

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National Rates

Loan Type Today +/-
30 yr fixed 3.78
15 yr fixed 3.06
5/1 ARM 2.69

Rates may contain points

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