The Truth About Current Mortgage Rates

Often people searching for current mortgage rates are commonly in the market to buy a new home or possibly to refinance their current property. Either way, the mortgage industry and loan application process can be an overwhelming one for anyone, even those who already have home loans. Make your first question- Is it a fixed rate or adjustable rate mortgage?

It is easy to be mislead by what you believe to be current mortgage rates because of what you see advertised online and at your local bank. The tough reality is that those great rates are not the ones that apply to you and the ones you see advertised may even be what you call an introductory or teaser rate.

What is a Teaser Rate?

In the retail industry, it used to be standard practice to advertise a sale or price on a certain item, but when the customer arrived at the store he or she was told that the real price was actually something higher, or that they were out of stock on that particular item and were offered something different and more expensive. This was called “bait and switch” and the government made it illegal.

With current mortgage rates, however, there is something very similar to this practice going on, and they’re called teaser or introductory rates. You may be familiar with an adjustable rate mortgage, where the interest rate will reset after a certain amount of time, typically every year. Some lenders would advertise a rate that was very under-inflated or purposely very low as their current mortgage rates. Why would they do this? So that borrowers would sign up with that introductory rate, not realizing that it was only good for a year or so and that after that time it would go up, and sometimes go up considerably.

After the initial time period ended, many borrowers and homeowners found that their monthly mortgage payment increased by almost 50%. For those who are very wealthy or have that extra room in their budget, that may be fine. However, the average home owner today struggles just to pay their current monthly bills. Having a mortgage payment that increases that dramatically will often stretch a family’s personal budget beyond their means. That type of lending practice frequently forces borrowers into foreclosure and even bankruptcy because they cannot make the newly adjusted payment. Typically this is all because they believed those current mortgage rates advertised at the bank were what they would be paying forever!

Fixed Rate or Adjustable Rate Mortgages

Know the Facts

It is very important for any potential borrower to really understand all the facts when it comes to current mortgage rates. You do not want to be “lured” into signing a 15 or 30 year home mortgage that you think will be at a specific set rate and amount every month, only to find out that your payment will increase by ten, twenty, or even fifty percent sometime down the road. Make sure that the original interest or refinance rates that you are being offered or that you see advertised are for a fixed rate mortgage, or that you understand how your adjustable rate mortgage will eventually vary from your current mortgage rates. This is the best way to avoid any unpleasant financial surprises in years to come.

Author & Editor Mortgage-Reduction.org : Willam Goodall

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