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Is Getting The Lowest Interest Rate Always Good?

By Eric Goodwill

Is getting the lowest interest rate always good?  Read here for situations when getting the lowest interest rate may not be a good thing!

One of the largest determinants into whether a mortgage loan is affordable is the interest rate.  Because of this, many people believe that getting a low interest rate is always good.  In reality, there are various situations when getting the lowest interest rate may not be good.

Rate is Variable

The first situation when getting the lowest interest rate may not be good is when the interest rate is variable.  Adjustable rate mortgages (ARM) typically attract borrowers by offering interest rates that are lower than fixed rate mortgages.  While these may have good initial rates, they will actually be far more expensive in the future if interest rates increase.  If you plan on keeping the mortgage for a long period of time, then getting a fixed rate mortgage with a higher interest rate would be better.

There Are a Lot of Fees

The second situation when getting the lowest interest rate may not be good is when there are a lot of fees associated with the mortgage.  Many banks attempt to entice borrowers to take a low interest loan, but the banks will compensate the low rate by charging higher fees.  Depending on how long you keep the loan, these high fees could actually make the lower interest rate loan much more expensive.

It Could Be a Scam

The third situation when getting the lowest interest rate may not be good is when the mortgage loan is a scam.  Some mortgage lenders will attempt to scam the borrower into taking a loan by offering a low rate.  In some situations, the low rate may be taken away at the last minute and the borrower will be stuck with a higher interest mortgage.

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2. Is The Lowest Interest Rate The Best Mortgage For Me?
3. How Do I Get The Lowest Closing Costs On My Mortgage Loan?
4. Are The Lowest Mortgage Rates Really The Best Mortgages?
5. How Can I Lock The Lowest Mortgage Rate In Today’s Tough Market?