The mortgage process can be confusing. We’re here to help you understand everything so you can be a new homeowner!
How Do Interest Rates Affect Your Payment?
The interest rate on a loan is used to calculate your monthly payment. The higher the interest rate, the higher your monthly payment. The lower the interest rate, the lower your monthly payment. See our monthly payment calculator for a demonstration of how this works.
How Can Points Lower Your Rate and Payment
Points are fees paid to the lender at closing. Each “point” is equal to 1% of the loan amount. For a $100,000 loan, a point equals $1,000. Two points would be $2,000.
With many loans, you can lower the rate by paying more points. It’s a good way to save money on interest over the life of your loan. See how points affect rates.
Use APR to Compare Loans
Home loans are more than interest rates and points. They also involve other costs. The APR expresses the annual cost of a loan as a percentage, factoring in not only its rate, but the points and other charges over the life of the loan.
The Truth-in-Lending law requires all advertisements for home loan credit terms include the APR. The APR is intended to enable you to compare terms of loan products from different lenders.
For accurate comparisons, compare loans with the same terms, interest rates and points. Then look at the APR. The loan with the lower APR is the less expensive.
As the preferred lender for Tropicana Homes for over 16 years, Tropicana buyers receive up to 6% contribution towards their home loan (up to $9,000 in gains towards the loan). For non- Tropicana Home buyers, there are up to 2% contributions towards home loans available.
I Found My Home!
Should I Lock in the Rate or Let It Float?
Ready to sign a contract? If you’re afraid rates are headed up, protect your buying power by locking in the rate at the time you apply for your loan.
What Should You Look For In a Rate Lock?
Make sure it allows enough time for your loan to be processed. And get it in writing. If you exceed the lock-in period and your rate expires, you may see your loan rate go up.
Think rates might drop while your loan is being processed? At the time of your application, take a risk and let it “float” instead of locking. You can watch rates and lock-in at a later date. The moment you tell your lender to lock the rate, that’s the rate you’ll get. But, be careful. Rates are as difficult to predict as the stock market. And if rates suddenly shoot up, you could find yourself with a higher monthly payment than you planned or, even worse, unable to afford the home of your dreams.