When you are going to buy home through a loan, your focus usually is on what rate the loan comes. You want to ensure a low rate home mortgage so that the loan repayment is never a financial burden on your limited resources. But finding a low rate home mortgage is not that easier as it involves lots of decision taking after carefully going through the aspects of a low rate mortgage.
Low Rate Home Mortgage implies that you are looking for a loan of lower interest rate. But finding a low rate is a complicated issue. It is not that you just apply for the loan and get it. First of all you will have to see your preferences in buying a home and then only you can beneficially decide on taking the loan.
For instance, if you are going to live in your home for not more than 7-10 years, then surely you would care less for building equity in home. You would be selling the home anyway. In such a situation, you should opt for Adjustable Rate Mortgage. Under the ARM you pay interest at lower rate for 5 to 10 years and this reduces your monthly outgoings. The main advantage of ARM is that you enjoy low rate for a certain initial period of the loan. Your interest rate is thus substantially lower than the rate on a fixed rate loan of say 30 years.
You should also note that after initial low rate duration of 5 to 10 years, you would be paying interest at the rate which will depend on period fluctuations. Clearly, then, your interest payment may even increase substantially or it may go down as is the prevailing market rate.
If you are buying a home with the intention of staying in it for many more years than equity build up in home may be your prime concern. You would like to take advantage of equity. In such a situation, a fixed rate of interest on home mortgage may prove to be lower for your circumstances. You beforehand know the monthly outgoings for the loan installments and so you can borrow money accordingly for a suitable repaying duration. So here, if monthly payments are lower and affordable for you than it can be called a low rate home mortgage for your circumstances.
Overall, on a home mortgage, low rate of interest depends on your circumstances. This is why you should first assess as to what are your main concern in buying your home and take your personal financial circumstances as well in consideration before going for a low rate home mortgage.