St. Louis Mortgage, USA Mortgage, Mortgage Rates

USA Mortgage - Sean Zalmanoff - Sean Z Mortgage

Mortgage Rates: How to Get a Low Mortgage Rate

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The question on every home buyers mind is, how do I get a low mortgage rate?

St. Louis mortgage rates

First of all, St. Louis home buyers can stay up-to-date and informed on everything mortgage related when they have Sean Z by their side. We study current interest trends daily to keep abreast of not just what is happening now, but what may be happening 6 months from now.

Mortgage Rate Shopping

It seems like an easy task: simply compare rates and pick the lowest one. But after you begin the process, you discover that comparing lenders is a difficult task. Some lenders are not properly trained and will give you either the wrong information or not enough.

When comparing what the different brokers and lenders are charging, make sure you’re comparing the rates on the same day. Why? Well, rates change from day to day based on the bond market. The bond market changes daily and sometimes more than once in the same day.

Another challenge, different lenders seem to have their own way of expressing the costs. So, make sure you compare the total costs to get the loan. Get the grand total of all the costs and then compare the interest rates.

The Sean Z Team mission is to get you locked into the best mortgage rate available for the mortgage loan that is right for your needs. We will guide you through the process and give you tips on the steps that you need to take in order to lock in at the lowest possible interest rate.

Secure a Better Mortgage Rate

The absolute best way to secure a good mortgage rate is with Sean Z. With expert knowledge on all things mortgage related he and his team are able to find the perfect loan program for you with the lowest possible mortgage rate.

The less risky you look on paper, the lower the mortgage rate. There are a few things you can do that will help lower points on your interest rate:

  • Clean up your credit.
  • How much debt you have is a key factor in determining not just the amount of the loan, but also the interest rate. Try consolidating debt if you have outstanding balances on multiple credit cards and be sure you are making timely payments on them.
  • Secure cash for a down payment. The more you are able to put down on a home, the lower your mortgage rate will be. Interest rates are all about securing risks. If you have a personal investment in the property up front, the risk is lower.

Contact a Reputable Lender

Consult a reputable lender with a proven track record of success like the Sean Z Team at USA Mortgage. As approved lenders for Fannie Mae, Freddie Mac and HUD endorsed loans, we can secure you a competitive rate that other lenders may not even be able to match.

Call us today at (314) 361-9979, or fill out our online contact form, to get all of the latest St. Louis housing information right here and let our team of mortgage pro’s help you to understand your options.

The Fixed Rate Mortgage: Interest Charges 101

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When you see mortgage rates displayed, there are always two numbers.

St. Louis Interest RatesLenders may display their interest rates with pride, but don’t explain what they mean.  For a home buyer this makes coming to a practical decision about a home loan difficult.

When you see mortgage rates displayed, there are always two numbers. The first one is your interest rate and will be used to figure out what your monthly mortgage payment will be. The second is the APR or annual percentage rate. That is the rate the mortgage would be charged if all of the costs associated with obtaining a loan were factored in as interest. Since most of the costs, such as application fees and origination fees are paid by you upfront, that APR has little bearing. It is helpful when trying to compare loans side by side, but won’t have anything to do with your monthly payments.

Understanding Interest Rates

The interest rate displayed is a yearly rate, so in order to factor it in with your principal payment it needs to be divided by 12.  The principal payment is the amount that you are paying towards the actual loan, before interest is added.  So let’s say for example you locked in a 6% interest rate on your $100,000 mortgage.  6 divided by 12 comes out to .5 %.  So every month you will be charged .5% interest on the balance of your loan.

What we have found to be confusing over the years for many St. Louis home buyers is why the actual interest amount decreases each month even though the percentage doesn’t.  That’s an understandable question, with a complicated answer.  To keep your monthly mortgage payment consistent, banks use what is called an amortization formula.  In our example the monthly payment is $600. Since the interest is applied to the total amount you owe, your first payments interest, .5% of $100,000 is $500.  That means $100 went towards the principal.

For the next month, your new principal balance is $99,900.  Apply your .5% interest rate to that amount and you get $499.50.  Now $100.50 went towards your principal.  The payments continue like that throughout the life of the loan, with the interest payments getting steadily smaller, while your principal payments steadily increase. With the mortgage payments structured this way the interest on the loan is always paid off first, with the homeowner making very little headway with the principal balance for the first few years of the loan.

A very simplistic example was used, just to give you a basic understanding of a complicated math formula.  When applied in real life, other factors may possibly be weighed in, such as mortgage insurance, homeowners insurance and property taxes.

Best Thing For a Homeowner

One of the best things a new homeowner can do to increase their equity faster and decrease the amount of interest they pay is to make additional principal payments with each month’s mortgage.  Even a small amount each month can go a long way towards saving you thousands on interest.  Plus you are building equity with your home, which could give you better loan opportunities in the future.

Finding your way through the mortgage process is not easy, even for experienced home buyers. Ask your Sean Z mortgage expert for more details about which loan will work best for your circumstances. Call us today at (314) 361-997 or fill out our instant contact form.

 

photo credit via Flickr: 401k Limits

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Sean Z Team