In every home equity loan, the interest rate for home loan is an important part. It is as important as the mortgage fees. In various countries according in the US, the applicable interest rate types consist of three types. These are the most common types used by banks and other financial institution. However, you cannot expect to get great features from all those three types. Each type basically has its own advantages and disadvantages. Therefore, it is important to learn the fact about this interest rate. Even if you already applied for a loan, it is never late for you to learn about these facts. Maybe, you can even shift your loan to get lower rate for the rest of the term.
The first thing you should know that fixed rate is the most common in the US. In fact, almost 90% of home equity loans are calculated based on this interest rate. This is basically claimed as the ideal rate for both lenders and borrowers. Unlike other rates, it is said to be the only rate that comes with protection for the borrowers. That is because the borrowers pay the same amount monthly payment and interest rate across the term. Therefore, any changes on the interest rate will not affect the amount of rate in fixed rate home equity loan.
The second fact shows that borrowers can negotiate on the amount of the interest rate as long as it is not below the minimum net. Usually, borrowers have to fulfill particular qualifications in order to get this kind of rate. For instance, they have to pay minimum down payment amount which is usually higher than what other borrowers have to pay. If you are qualified, it is possible for you to get much lower interest rate to let you save more money.
The third fact is related to the positive and negative things regarding variable rate. It has a plus where it enables you to enjoy lower rate when the minimum rate is lowered by the fed bank. However, it also comes with negative side as it makes you to pay more in case the fed bank raises the minimum interest rate. But if you have considerably high financial capability, the variable rate is a better option for you. The last fact is about the importance about your credit score. Yes, it affects the amount of rate you should pay. A better score allows you to pay lower interest rate for home loan.