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Mortgage Rates Explained by Your Charity Donation Realtor

November 15, 2017

For many new first-time homebuyers, the process can be eye opening and educational. If you will soon be buying your first home, or need to brush up on your knowledge, understanding mortgage rates is key. Don’t worry—mortgage rates are not rocket science, but if there are areas you do not understand—your charity donation realtor will be there every step of the way to help. Learn about the basics of a mortgage, and the differences between fixed and adjustable rates. This will help you decide what is best for you when buying your next home.

Basics of a Mortgage

A mortgage is a bank loan that enables you to finance a house. Prior to getting a loan, you will need to get pre-approved first. Your realtor can assist you with the process and help make sure you have all of the proper documentation. Getting pre-approved is especially important in Denver’s housing market as homes sell fast. You want to be 100 percent prepared to act on a home that you would like to buy. As you may know, with any loan, you will need collateral for it in the event you default on your bills. With a mortgage, the house serves as the collateral. In addition, you will also pay a certain percentage, as a down payment, towards the house. This will reduce your principal, which is the amount that you borrow for the home. In order to be able to take out a loan through the bank, you will owe interest on your mortgage so the bank is able to make money. There are two types of mortgage interest rates: fixed and adjustable.

Fixed Rates

Fixed interest rates are rates that do not change. Upon purchasing your home, this means you will have the same interest rate until you pay off the loan or choose to refinance. When having a fixed rate mortgage, your payment will also be the same each month, too. Those who prefer stability and would rather not be unsure of what a monthly mortgage would be should choose this option. While an interest rate has many factors, one being your credit, the average fixed rate mortgage in Denver is around four percent.

Adjustable Rates

An adjustable rate mortgage will change throughout the life of the loan. While there is usually a maximum amount that an interest rate can be raised to, your interest rate will eventually change based on the market. You will typically have notice before your rate changes. Each loan is different, with some changing every six months to year. In most cases, the adjustable rate will stay the same for a few years. Because of the type of loan this is, the rate will start off lower than fixed rate loans. Then over time, it will increase. If you are not planning on staying in a home long term, this may be a great option for you.

From assisting with your pre-approval to the mortgage and home purchase process, the Giving Back Group will walk you through all of the steps. In addition, we also take 20 percent of our commission for you to donate to a charity or cause of your choice—at no additional cost to you. Contact us today to see how we can work together to help you find your next home.