10:08 13 August 2013
If you’re one of those people who are thinking about buying a real estate property, you need to decide if you want to apply for mortgage through a mortgage company or a traditional bank.
Mortgage companies are brokers who work in bringing lenders and borrowers together. These companies start with base rate when they are calculating interest rates for borrowers like you. Base rate is based on the interest rate that the government charges banks for loaning them money.
To keep it simple, this is how a simple calculation will look like:
Prime Rate + mortgage lender rate = interest rate.
After a mortgage lender established its base rate, it is often fixed. However, it can go up and down depending on the borrower’s credit history, employment, and size of the mortgage in relation to the value of the house. If you want to qualify for lowest interest rate you must be willing to pay bigger down payment, have a stellar credit history, etc.