California Home Mortgage Rates

Interest is a percentage that borrowers pay to lenders for the service of lending money. This is how lenders make profits on the money they lend out for buying homes. The mortgage rates are mostly front-loaded, which means that the initial payments are used towards paying the interest on the loan. Mortgage rates are determined by a lot of factors such as the credit score of the borrowers, down payment made, amount of the loan applied for and the policies of the lender. Low interest rates on California home loans are usually offered to borrowers who have a high credit score. Applicants with good credit scores may even qualify for 'zero down payment,' 'no documentation' or 'stated income loan.' Borrowers who are self-employed or cannot have their income verified prefer either a 'no documentation loan' or 'stated income loan.'

Borrowers in California have the option of locking in or floating the interest rates while applying for a home loan. With the floating option, borrowers can watch the rates and lock it at the desired value. If they reduce the interest rate on their mortgage the borrowers would pay an amount that is generally equal to 1 percent of the loan amount, which is known as a point. To get a lower interest rate on a $100,000 mortgage, a borrower may have to pay up to three points, which means three thousand dollars.

If borrowers require financing for a new home, they can approach mortgage lenders as well as brokers to apply for the loan. It is advisable to get multiple quotes from different lenders before completing and submitting a mortgage application. Brokers automatically provide multiple quotes, as they represent many lenders. By receiving several quotes, borrowers can compare various loan options and select the one with the lowest mortgage rate.