When buying or refinancing a home, it is essential to compare mortgage rates and loan options available to you. Doing this will enable you to select a loan that best meets your needs and allows you to realize your goal of homeownership.
Fixed rate mortgages: The most popular type of mortgage, a fixed-rate loan provides borrowers with security about the interest rate and monthly payment. Furthermore, it helps ensure you don’t end up paying more than necessary over the life of your loan.
Fixed-rate mortgages often feature a low initial interest rate that remains fixed until you refinance or sell the home. Depending on the terms of your mortgage, you may have the option to make extra payments towards paying off principal faster or refinance for a lower rate and shorter term.
Adjustable Rate Mortgages (ARMs): ARMs typically offer lower initial interest rates than fixed-rate mortgages and can be adjusted periodically throughout the loan’s tenure. You can determine how much your rate may change by using an adjustable-rate mortgage calculator to estimate how much it could change.
When looking for an ARM, there are various types and features to consider. To ensure you understand all your options, consult a mortgage expert who can assess your individual situation and locate the ideal mortgage.
For borrowers who anticipate their income to increase over time, adjustable-rate mortgages (ARMs) can be a viable option. They offer lower monthly mortgage payments and may be easier to qualify for than fixed rate mortgages.
A fixed-rate loan option can be an ideal choice for homeowners who wish to avoid any extra fees or expenses on top of their monthly mortgage payment. This includes mortgage insurance, property taxes and homeowners insurance. Furthermore, you have the option of having a fixed rate loan with a longer term than 30 years which could save thousands in interest costs over its life span.
The Consumer Financial Protection Bureau (CFPB) offers a list of interest rates you can expect to pay for fixed rate loans in various locations around the United States. These rates are updated biweekly, giving you an accurate forecast of what you might owe at any given point in time.
Fixed rate loan options can include conventional, VA, FHA and USDA financing. Banks, credit unions and other lenders provide mortgages as well.
No matter which loan type you select, be aware that interest rates can vary widely between lenders and within a single portfolio. Be sure to compare official loan offers known as Loan Estimates before making your final decision.