All Americans dream of owning their own home, but with skyrocketing property prices, this dream remains unfulfilled for many. Don’t let that happen to you. Shop for the best mortgage rate and own a home. If your credit history is good, much better! You will be offered a low rate that will follow your payment plan. Ask your lender about fixed and adjustable rate mortgages.

The mortgage rate can change over the life of the loan and depends on several factors, such as the amount of the loan, the index to which it is linked, the margin of the lender and much more. You should learn all about their programs and rates to avoid paying more than what is required on your home loan.

Lender’s Margin

The lender’s margin plays the most important role in deciding your adjustable rate mortgage. So, know your lender’s markup. Your lender considers this margin when it comes to ‘adjusting’, which is resetting your mortgage rate. This lender’s margin also indicates how quickly your interest rate will increase or decrease when your lender adjusts your loan. If you compare two similar home loans that have the same interest rate, the loan with the higher margin will cost you more. It will also increase with fluctuations in market rates. So make sure you know the margin your lender is setting up for your program.

The most common margin taken by lenders is 2.75%. When you see a lender setting a higher margin than the margin on your current home loan or second home loan, sit down. He’s probably trying to get more money out of you, as fast as possible.

Here’s what you could do to get closer to the 2.75% margin while looking for an adjustable rate mortgage.

  • Know the risks involved as the market rate is always fluctuating.

  • Consider paying up to a point to buy on margin.

  • Negotiate with your lender, hard and strong! Most lenders reduce margins by up to 5% if you negotiate with them.

  • Last but not least, be sure to look at your mortgage rate margin, so your lender knows you are aware of its importance. A lender will offer you a reduction in your margin if you tell them about it.

    • With prudence and some intelligence, you can make your adjustable rate mortgage the best mortgage rate for you.