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*Rates updated on January 9, 2017
What Mortgage Rate Can I Get
Mortgage rates play an important part in getting and making your dream home affordable. Virtually everyone who is looking for a home will take out a mortgage, or a loan, to buy one, as paying upfront with cash isn’t a reality.
The next step in the process is understanding and finding what options you have when it comes to finding the right mortgage with affordable rates. Once you know your options a little better, you can talk to your local provider to work on getting you and your family into not just a house, but a home that you’ll enjoy for years to come.
What are mortgage rates for first-time buyers?
There are two basic types of mortgages:
- Fixed rate mortgages -are loans with a fixed interest rate throughout the loan term, which may be from 10 to 30 years. This is a good option if you plan to live in your home throughout the mortgage period and are confident you can make consistent loan payments at the rate you agreed to when taking out the loan. There is always the option of refinancing later, but it is not something you want definitively count on.
- Adjustable rate mortgages – usually have steady interest rates during the introductory period, of 3-10 years, but can change later. If you can’t afford a larger mortgage payment initially but might be able to later, this could be a good option for you. This may also be a good option if you’re not considering staying in the house for a long period of time. While adjustable rate mortgages usually offer lower interest rates, later on, there’s always the risk of it rising after your introductory period.
Other Mortgage Types
There are also a few more options available for those who are eligible.
- Jumbo loans are for homeowners looking to buy expensive homes, costing more than $417,000 in value and need a larger amount than a conventional loan offers. The requirements are a little more strict and good credit helps in being approved.
- FHA loans are ideal for first-time homebuyers because they allow you to put a lower down payment. These loans are backed by the federal government and lets you purchase a home with an initial down payment as low as 3.5% and often has competitive FHA mortgage rates.
- VA loans are backed by the United States Department of Veteran Affairs and are an attractive option for eligible US armed forces service members. It includes no down payment requirements, low VA mortgage rates, and no mortgage insurance.
- USDA loans offer affordable USDA mortgage rates and are meant for moderate-income families in need of assistance. Though it doesn’t require a down payment, there are strict rules about the type of house you can buy, which must be in an eligible, developing, rural area.
Generally, the lower the risk you are to your lender, the lower your mortgage rate will be. Lenders consider various factors to measure your risks like your down payment amount along with your monthly income and expenses. Even your credit score affects your ability to get a mortgage. HomeRate Mortgage is happy to go over your situation and work with you to discover what option is best.
What Mortgage Rate Can I Get With My Credit Score
If you wonder does mortgage rates depend on credit score, the answer is yes.
A good credit score of 740 and above makes you a low-risk candidate. This means you’ll be offered lower monthly conventional mortgage rates, allowing you to save money throughout your lease term.
However, if you have less than perfect credit, you are usually still able to qualify for a mortgage. Just keep in mind that mortgage rates for those with bad credit tend to be a little higher.
This is why it’s important you check your credit score before applying for a loan. Look for any mistakes you might be able to correct, and if you have time, it may be better to improve your credit score first, by paying off some debt, before applying for your mortgage.
Compare mortgage rates
It is important to know that lenders don’t always offer the same rates and mortgage options. It is important to compare quotes before selecting who to take out a loan with.
How do mortgage rates work?
Knowing what affects your mortgage rate can help you understand what is involved in the application process and help you be prepared for faster approval. Lenders will look at the principal amount of the home loan you are applying for, current interest rates, your income, down payment, and include processing fees and charges. For example, most mortgage companies need proof that you have homeowners insurance to approve a home loan.
If you have all of this information and quotes from different lenders, you can figure out how much your monthly payment will be by using a mortgage calculator. Play around with different rates, the length of your loan, and different down payment amounts for a better understanding of how each of these things affects your monthly payments.
Are mortgage rates negotiable?
This is a question which is bound to cross every homebuyer’s mind. Yes, they are, in a way. One of the best ways of reducing your mortgage rates is by making a larger down payment. On the other hand, if you choose not to make any initial down payment, you will effectively be increasing your monthly payments with higher rates. There are a lot of factors involved, and our experts at HomeRate Mortgage have years of experience to answer any question you might have.
Even if you’ve been approved and are in your house already, there is still the option to refinance and adjust your mortgage rate, ideally to lower it. The main reasons why you would refinance is to reduce your interest rate, extend your mortgage period, change lenders, or refinance with a cash out option to get some money in your bank account now.
When to refinance mortgage rates usually depends on:
- If the current market rates are better now than when you first applied
- If you’ve built up your credit score and may be eligible for better terms
If you’re thinking how to refinance mortgage rates, you should first to determine the reason for refinancing, check your current credit score and find out your home’s equity value.
Refinance additional information
For those with a particular type of mortgage, such as an FHA loan, be sure to check FHA refinance rates or streamline refinance rates before proceeding. Look at VA refinance rates if you have a VA loan, and jumbo refinance rates if your existing mortgage applies.
In addition to new mortgage rates, remember to add in refinancing cost like application fees, origination fees, and the cost of an appraisal, if you need one. Talk to your local lender to see if this is a good option for you and find out what else you need to get the process started.
Getting into your dream home may be a confusing process, but we are here to help. Don’t make buying a home a headache; we are happy to worry about the specifics so that you can enjoy the bigger picture.