When applying for a mortgage, searching for the lowest interest rate is good practice. After all, a small difference in the rate could mean savings of tens of thousands of pesos—or more—over the life of your housing loan.
But then again, any reliable Lancaster New City review would advise you to take the cheapest mortgage rate you could find with a grain of salt. Here’s why:
It Might Still Go Down
Housing loan rates change from time to time. The lowest interest rate today might not be the lowest tomorrow. Timing is everything. You don’t want to lock in the prettiest deal too early, but you don’t want to wait for too long before pulling the trigger either.
How would you know if interest rates are bound to head south? Study trends to determine whether they’re likely to fall. Keep your finger on the pulse of the lending market for months to know when the current mortgage rates have hit rock bottom, and are going nowhere to up.
It Might Be Fleeting
Lenders offer different housing loans with varying interest rates. The ones they advertise, though, are usually the lowest they’re willing to offer to the least risky borrower. They do this to attract new customers and stay competitive.
As a borrower, consider the possibility that the lowest interest rate you find might not be the best deal for you. For all you know, it could be a variable mortgage rate that’s subject to reprice and increase significantly every few years. Even the interest rate of a fixed-rate housing loan could incrementally change to a predetermined level.
It Might Cost You More Money with a Longer Term
Hunting for the lowest interest rate isn’t bad, but ignoring other important factors, like the loan’s term, can hurt your long-term finances. Rather than comparing mortgage rates, compute how much housing loans would cost you based on the number of months you’d pay for them. A 20-year mortgage with a small interest rate could be more expensive than a 10-year loan with a slightly bigger rate.
Every discerning borrower approaches the mortgage-shopping process with healthy skepticism. Since nothing is what it seems, exercise your due diligence to unveil the true costs of your best housing loan options before you sign on the dotted line.