Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage—whether it's a home purchase, a refinancing, or a home equity loan—is a product, just like a car, so the price and terms may be negotiable. You'll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of dollars.
Typically, the longer a home loan’s interest rate is “fixed” for, the higher that rate will be. For example, a loan with a 2-year fixed interest rate will usually have a lower rate than a loan with a 30-year fixed interest rate.
The length of time a homeowner expects to own their home can also be a determining factor in which loan product to choose. If you do not foresee owning your home for more than 5 years before selling, a 5-year fixed rate home loan, or 5/1 ARM, may be a good choice. The logic being, “why would I choose to pay for a home loan with a higher interest rate for 30 years if I only plan on being in the home for 5 years?"