A mortgage loan is basically taken against a property. In case you own a property you can keep the house as collateral and avail a loan to help you in times of financial crisis. Though a property with a good value can guarantee you a good mortgage loan, rates of the loan are often dependent on various factors like your credit ratings, personal assurance, etc. We take a look at the various mortgage rates that are usually available to the customer and the advantages or disadvantages of each.
Mortgage rates may vary depending on the type of loan and the duration of the loan. There are basically three types of mortgage rates, these are-
# Adjustable Mortgage Rate
# Fixed Interest Rate
# Variable Interest Rate
There are numerous mortgage companies which offer refinance that involves obtaining a new mortgage loan on a property that is already owned - and that is often to replace existing loans against the property. It is a good time to refinance when the mortgage rates are low.
One of the major benefits involving refinancing is the fact that it can save the monthly payment of an existing loan. Lock-in rates are another very interesting schemes these companies offer.
The interest rate of a mortgage loan is fixed and that does not change, and based on the changes of an underlying interest rate index, a variable interest rate moves up and down.
An interest rate may change in case of an ARM based mortgage loan; which is usually in response to changes in the Treasury bill rate or prime rate. The mortgage holder gets the protection by a maximum interest rate, which is called a ceiling; that is usually reset annually. Adjustable mortgage rates or ARM usually starts with better rates than fixed rate mortgages
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