Your Questions About Home Loan Interest Rates

Linda asks…

Does the home loan interest rate vary between online quotes and the real ones ?

– I am planning to buy a home
– i have put an offer on a house and almost 100% done deal

Now I have to look out for a home loan. I am looking at several online interest rate quotes what lenders are giving based on my facts.

Some of them are sending quotes for 4.78% 4.5% , now does these rates change when we actually sign there application or do they have to stick with the rates what they have quoted me online ?

John answers:

John Paul,
First, I hope you contacted a good, reputable loan office BEFORE putting an offer on a home. And I hope you are getting good professional guidance through the process. The home buying process can be a thorny one if not handled properly…and the same is true of the home loan process.

There is no question that there are some great deals out there…and some great rates. But you have to think of the online deals as “big tent” offerings … While they may well apply to your particular circumstance … They also very well may not. Every lender, online or off, has their pool of offerings … Some broader than others. Each has certain criteria that must be followed in securing that loan. And not every loan is available for every borrower. Are you self employed? Do you have a regular salary? Do you get hourly pay? How long have you been working for your current employer? What other fixed debts do you have? Do you pay child support or allimony? Do you have any positive or negative offsetting factors? What are your credit scores? These things, and many other factors, impact what type of loans you may qualify for … And what types may not be available to you at all.

I’ve never been a fan of “shopping rates” for the simple reason that they don’t tell the whole story. I remember a buyer of one of my listings “got a great deal” from a particular lender (which he happened to find online). Problem was when he got to closing NOTHING in the loan package bore any resemblance to the loan he THOUGHT he was getting! He thought it was a fixed rate loan … It was not. The rate he’d been quoted was not the rate he actually got. He’d never heard of “negative amortization”, and his loan had it. He never gave any thought to a “prepayment penalty” … His loan had that, too! With a lot of work we were able to get the prepayment penalty waived (this is a BIGGIE because the penalty was over $7,000 in the event he sold his home or refinanced within the FIRST 3 YEARS of the loan!) Even though the terms were horrible, he DID close on his purchase … And went right out and immediately refinanced his new home!

My point is that WHAT YOU DON’T KNOW can cost you big time. This is not something to “wing it” with. Talk to friends & coworkers & family who’ve dealt with reliable lenders in the past and ask for recommendations. Most certainly if you are working with a real estate agent, ask them for recommendations as well. We deal with lenders all the time and if the agent is experienced, they have an assortment of lenders they know are professional, reliable, ethical people … And they also know who to avoid!!!! Talk to a few recommended lenders … Have them prequalify / preapprove you, making recommendations on programs they think your financial profile best fits. As long as the rates they offer are “in line” with with the market in general, I wouldn’t worry about getting the best “deal”. When you’re looking at just raw numbers, you don’t know what is being “cut” to get to that number. Quite often it’s reliability and/or service.

By the way, my preference is to ALWAYS deal with a lender who will shephard you through the process from application to closing on your purchase. As the process moves along, you want to have a real live person you can call to answer questions, follow up to be sure all the proper steps are being taken, and to hold accountable if/when they’re not.

Good luck! I know this is an exciting time and I hope all goes well for you!

David asks…

What are best home loan interest rates in Australia?

John answers:

It all depends.

If you are shopping around for a home loan and you want a good interest rate, just book in to see a mortgage broker. They have a range of mortgage products available from a heap of different lenders, so they can match you with the best mortgage for your situation.

You can probably find one in your local phone book.

You will pay a fee for the service but that is taken out of your mortgage, so you don’t usually pay it up front.

If you go to a mortgage broker, you won’t need to wade through heaps of advertising material yourself. The broker will have it all there and find the information you need.

Best wishes

John asks…

home loan interest rates?

i have taken home loan in chennai. but interest rates changing time to time due to floating rate interest. pl suggest to come out from the problem.

John answers:

You should:

1. Pay off your home loan, or
2. Cause interest rates to go down, or
3. Refinance to fixed rate home loan, so the rate wont change.

Chris asks…

How will the decrease in home loan interest rate help the realty sector?

Everyone is talking about the cut in the interest rates for home loans. Will actually the cut gonna help in reviving the realty sector?Is it a good time to buy a property rite now or should wait for some more time?

John answers:

Yes! It may ! It is the best buy trans-duration which may or may not remain further.Reduction in property prices and home loan rates could boost demand.A recovery in the property market in the next six months hinges on lower home loan rates to lure first-time buyers. Mortgage rates in India are at 12 percent to 13 percent, about twice what they are in China. That is unrealistic ! If rates are cut, the domestic demand itself will carry the country through this difficult period.It’s tough to say if a cut in interest rates will change the sentiment.In the current environment, people in India will be wary of buying property and stretching themselves. With rising interest costs and high property prices, buyers were pinning their hopes on loan rate cuts to buy homes in the festive season. For developers, who are staring at a demand slowdown, unchanged rates meant they could not prop up the sales in a traditionally busy season.High interest rates have already dented property demand in the past few quarters and expectations were that rates would soften after the Reserve Bank of India (RBI) announced a 100-basis point cut in the repo rate to 8 per cent and another 250 basis points cut in the Cash Reserve Ratio (CRR) to 6.50 per cent. However, the country’s largest bank, State Bank of India, on Monday said it would keep its lending rates, including home loan rates, unaltered.Even though loans will become cheaper, the bank plans to tighten the criteria for lending to individual borrowers.

Carol asks…

FHA home loan interest rates range anywhere from…5 to 8%? I am curious, do you know?

I know it all depends on your personal situation, but is there a limit? I mean certainly no one is handing out loans at 15%… I would guess, anyway.

John answers:

What interest rate you get will depend on your financial picture – your DTI (debt to income ratio) your FICO score and other variables like how much money are you putting down?

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