Denver Real Estate Blog

Is the Interest Rate the Most Important Factor?

The answer is usually no. Interest rates are indeed important, but not necessarily the most important factor when considering a mortgage loan. While it is generally true that a lower interest rate results in a lower payment, it is important to understand that it is not always true, and that there are several other factors that should be taken into consideration when selecting the mortgage loan that is right for you.

Unfortunately, many consumers focus too heavily on the interest rate because it represents the most easily identified aspect of price when it comes to a mortgage loan. This can open the door for less reputable lenders to take advantage of consumers who are too focused on the interest rate, and who may not appreciate the importance of other factors.

Mortgage interest rates move up and down very much like the stock market. Rates can move on a moment-to-moment basis. There is absolutely no way for anyone to know how interest rates may change an hour from now, let alone a day or week from now.
Keep in mind that advertising generally requires production of materials and advance scheduling for placement of those materials. Those requirements mean days or weeks of planning and preparation.

It can be very beneficial to consider how a lender who advertises an interest rate today, for instance in today’s newspaper, could have possibly known what the rates would be today - when that advertisement was produced days in advance.

While interest rates for consumer loans - such as an automobile loan - are more stable and predictable, mortgage interest rates move constantly. Therefore, we encourage a healthy level skepticism toward advertisements for mortgage loans that offer a specific rate. It’s rather like a stock broker promising that a certain stock will be trading at a certain price - next week.

Resource

A Colorado Rental Property Resource for both landlords and tenants can be found at http://www.coloradorentalproperty.net . Online land lords can post detailed information regarding their rental property, including 5 color photos. The ad can be self directed by the landlord to their cell phone or property management company. This is a service provided FREE by RealEstateColorado.Net and the ad will remain on line until it is asked to be removed.