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Interest Rates

Essay by   •  August 24, 2013  •  Study Guide  •  586 Words (3 Pages)  •  651 Views

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There are a number of factors that must be considered when deciding which is the lowest rate and which is the highest rate. In my opinion the loans offered through Discover Home Loans is the highest and the loans offered through First Financial Services Incorporated are the lowest rates offered. The reason I said this is because I looked at the APR and EAR over a period of time. (Reed, 2013)

Interest rates should not vary from lender to lender because they are based on a standard index that is used nationwide. Even though interest rates should be the same, you have to take into account the different fees and charges that a lender may apply. These fees can make getting a reverse mortgage more or less expensive between lenders. ("Do different lenders," 2013) The main reason people get different interest rates from lenders is mainly determined by their credit score. People who have a poor credit score are deemed to be high risk and are given higher interest rates than those who have better credit scores. The determination of this is because people that have better credit scores are more than likely to pay back their loans.("Why do lenders," 2013)

Three common mistakes that most homebuyers make when looking at quoted mortgage rates are first choosing the wrong mortgage, letting qualifying ratios get out of hand and not having enough of a down payment. The only way to stay away from disastrous mistakes like this is making sure that you have done careful examination of the sorts of mortgages that are offered in your area. Secondly you should take a good at what your budget is for the home purchase. Factor in your income and have clear and precise future plans. Lastly you will need to modify your mortgage decision to incorporate those factors. You should never just accept a loan that is offered by the lender because if may not be beneficial for your situation.

Material impact on the cost to the home buyer will definitely be impacted by interest rates. Having a clear understanding of positive financial impact low interest rates and home owner ship are key things that will assist prospective home buyers when they start considering home ownership.

Discover Homes Loans 3.556% APR $678 / month (est 30 Yr. Fixed EAR-3.6156

3.005% APR $1,036 / month (est 15 Yr. Fixed Fixed EAR-3.6156

Quicken Loans 3.000% APR $1,448 / month (est) 10 Yr. Fixed EAR-3.0408

3.103% APR $1,043 / month (est) 15 Yr. Fixed EAR-3.0424

3.736% APR $693 / month (est) 30 Yr. Fixed EAR-3.0439

LenderFI 2.831% APR $1,437 / month (est) 10 Yr. Fixed EAR-2.8673

Gateway Bank Mortgage 3.389% APR $664 / month (est) 30

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