I have to get a mortgage. I see lots of different rates, and I hear rates are going up. But how can mortgage rates be so different?
You have to look at it this way: A company is about to loan you a whole bunch of money that you will have to pay on for a long time. If you do pay off the loan, everyone is happy; the lender made money and you have your home.
But when a mortgage company looks at your application, it takes into consideration the kind of risk you will be. The higher the risk, the higher the mortgage rate. A high risk person might be one with a lower credit score, for example, or a scarce credit history.
Some lenders are big and some a small. A smaller lender might offer a slightly higher rate because they think being in your town and offering great customer service is enough to justify a point higher. But the opposite could be true, too. A small lender might offer a low rate.
Mainly the lowest interest rates advertised on the internet are perfect case scenarios: You will get the lowest interest rate if your credit score is high; the property is the best type; debt-to-income ratio is low; purchase or refinance; and downpayment.
Most people don't actually get the barebones interest rates. But most people do get good interest rates in the range of acceptable. Interest rates can change day-to-day, so it is difficult to say what the best interest rate is right now But Kiplinger's Personal Finances predicts that the 30-year fixed mortgage rate will rise to 4.6 percent this year with the 15-year fixed rate at 3.8 percent.
In this market of rising interest rates, if you are going to buy, it's time.
Rick Good spent ten years in the newspaper business, including with The News & Observer (Raleigh, NC) and The Greenville News (Greenville, SC). He co-wrote, with Melinda Coleman, Rutledge to Riley: Governors of South Carolina, 1776–Present (Published by The Greenville News), and is the author of Mind Games Trivia #1 (Amazon). He has recently spent 15 years creating original trivia content through Sounds Good Mobile Entertainment and continues that with his new company, SGME Software. He edits The Smart Reader’s money, real estate, and business coverage.