What is considered a good mortgage rate?

When being quoted a mortgage rate by a mortgage broker, you may wonder if you are getting quoted a good rate. A good rate depends on many things such as current market conditions, your credit score and amount borrowed.

Remember that every mortgage situation is different. Your neighbor might have the exact same house as you, but your mortgage could be drastically different. They may prefer an interest only loan, where as you might prefer a 30 year fixed mortgage.

The rate is the part of a mortgage that most people fixate on, but usually the bottom line will be the payment. If you are concerned about the rate it is most likely because you are concerned about getting the lowest rate and therefore the lowest payment. If payment is the true driving force of your concern you may want to consider some other mortgage options such as a 40 year term, interest only payments, an ARM or a Pay Option ARM.

To determine if you're getting a good rate, you need to speak with three or four mortgage professionals. Make sure you do business with who ever seems to be most genuinely concerned and who you feel is being most honest with you, provided their rate is reasonably inline with the going average for the type of loan you are looking for.

You can get a "better" rate by paying points to buy down the interest rate. Or you can get a "worse" rate by paying a higher interest rate in return for lower fees and closing costs. Either could be advisable depending upon your situation. However, when comparing interest rates, be sure to also compare the associated fees.

Keep in mind that a lower interest rate does not always mean a lower monthly payment. For example, and interest only loan may have a higher interest rate but the payment will be lower because you are making no payments to principle.

» DISCLAIMER: The information contained in this article on 'What is considered a good mortgage rate?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.