Understanding Oakland Mortgage Rates
If you have recently shopped around for a mortgage loan to finance the purchase of a new home, you were likely introduced to a whole spectrum of new, and possibly confusing, terms and jargon. There’s a lot to learn about what goes into determining Oakland mortgage rates and what different numbers mean, so here’s a guide to understanding mortgage interest rates and finding the best ones.
Mortgage Rate Glossary
Whether you’re obtaining a fixed rate mortgage or ARM, the following terms will come up often during the mortgage negotiation process:
Annual Percentage Rate (APR): This is the total cost of financing over the course of a year, expressed as a percentage. Unlike a simple interest rate, the APR also includes any points, broker fees and other charges the borrower is required to pay.
Index: An index is the economic indicator that adjustable rate mortgages follow and are used to calculate the new interest rate during the adjustment period.
Points: Points are charged by the lender to cover loan origination costs or other fees/compensation. One point equals one percent of the principal loan amount. Points can be paid by the seller or borrower (or both) and are usually paid at closing. The borrower may choose to factor points into the loan for a higher APR. Conversely, the borrower may also pay discount points in order to have the interest rate lowered.
Principal: The total amount borrowed or remaining loan amount, excluding any interest charges.
Getting the Best Mortgage Rate in Oakland
When it comes to finding the best mortgage for you, all of the above factors will have to be considered. For example, you may find that a lender’s interest rate is one of the lowest in the city, but the APR is actually quite high. Factoring in things like points and principal amount will help you determine which mortgage rates are truly the most competitive.
Finally, researching the Oakland mortgage rates currently available will ensure you select the best. There are a lot of lenders in the Oakland area, but only a handful have the best rates.
