Buying a new home is one of the largest purchases Americans make in their lifetime. Doing your part to make sure you keep costs low by finding the lowest mortgage rates today and being smart about which home you choose can keep you in the black.
Not all financial institutions are created equal, as some mortgage lenders will tack on charges and mortgage points to get the most out of your hard-earned money. Taking a strategic route, however, can not only save you money in the short term, educating yourself about the various home buying options and current mortgage rates can help reinforce whether you make a sound financial choice overall.
There are many types of mortgage loans available in the housing market, that aim to bring convenience to different incomes and financial circumstances.
A fixed mortgage loan is a mortgage loan whose mortgage rates do not fluctuate during the life of the loan. Instead, they remain static, which is good news for homeowners who prefer knowing how much they can expect to pay every month and who cannot necessarily afford a surprise rise in mortgage interest rates.
This type of mortgage loan is commonly referred to a traditional mortgage, as fixed rate mortgages are the most popular home loan rates at either 15-year mortgage rates or 30-year mortgage rates.
The mortgage interest rates of adjustable rate mortgages fluctuate at a regular interval and change based on current mortgage rates. Often mortgage interest rates for these kinds of home loans start off at an unbeatable low percentage and it’s this low rate that draws in home buyers.
Typically, adjustable rate mortgage loans have a maximum cap with regard to how high rate percentages can get from the loan’s initial mortgage interest rate. These are in place to ensure that borrowers don’t succumb to excessive rate hikes that can be the downfall of homeowners’ finances.
Hybrid mortgage loans are a relatively recent development among mortgage lenders. Their terms fuse the benefits of a fixed mortgage and an ARM, to provide borrowers with a longer duration of stability, while still offering a rate that rivals current mortgage rates on traditional fixed home loans.
If you’ve decided to work toward buying a home, you’ll need to have a down payment prepared before seeing a mortgage lender. The down payment is essential in the loan process, as it helps to secure the loan and can possibly give you an in to more competitive mortgage interest rates and offers.
Future home buyers often ask, “How much of a down payment is enough?” The generally accepted answer is that borrowers should save at least 20 percent of the home price. So, if the home you’re eying is listed at $250,000, your minimum down payment should be at least $20,000.
This amount may seem really high, especially for those who don’t have an expanse of savings funds waiting to be spent, but keeping to this recommended down payment guideline can save you money in mortgage interest rates down the line.
The decision to buy a home requires a thorough understanding of all the mortgage options available to you as a borrower, as well as the loan from beginning to end. Here's where you can start:
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