When it comes to mortgages, there are lots of options to suit nearly any budget. The first choice is to decide between fixed-rate mortgage and adjustable-rate mortgage. A fixed-rate mortgage is a type of home loan that maintains the same interest rate for the entire duration of the loan. The interest rate impacts the monthly payment, but if it is a fixed-rate mortgage, the payment is guaranteed to remain the same for the entire length of the loan. Mortgage Loans with adjustable-rate mortgage rates, also called ARM loans, are a home loan that has a fluctuating interest rate and changes over time.
If the interest rate changes over time, the monthly payment will also change over time. Hybrid adjustable-rate mortgages are the most common ARM loan offered today. The name “hybrid” came to be, because this loan product begins with a fixed rate for a specified period of time. After the specified period is up, the rate will adjust. The most popular of the hybrid ARMs is the 5/1 ARM loan, meaning the interest rate is fixed for five years and will change every year thereafter. The current mortgage rates are at record lows and it is a fantastic time to buy.
Currently the mortgage rates for the above mentioned products are on average: 4.63% for the 30-year Fixed-Rate Mortgage, 3.82% for the 15-year Fixed-Rate Mortgage, and 3.41% for the 5/1-year Adjustable-Rate Mortgage.
The second choice as a consumer is to choose whether to go with a conventional or a government loan. A conventional mortgage loan is simply a loan product that is not at all insured by the government. The loan stays in the private sector and is not backed by the government. A government insured loan is insured by a federal agency, usually either the Department of Veteran Affairs (VA), or the Department of Housing and Urban Development (HUD). The loan may or may not be made in the private sector, but insurance is received by the lender from the federal government.
Generally there are three types of government mortgages available.
– What are VA Loans? A VA loan is reserved for military service members and their families. 100% of the home purchase can be financed, which will eliminate the need for a significant down payment. The program is managed by the Department of Veteran Affairs and there should be a VA specialist in your area to provide you with more detail about what the program offers.
– What are FHA Loans? An FHA loan is insured through the Federal Housing Administration. If a borrower happens to default on the loan, payment will be made to the lender by the FHA.
– What are USDA Loans? is managed through the United Stated Department of Agriculture. This loan product is reserved for those who live in certain areas of the country. Income restrictions do apply. This program is primarily designed for low-income residents in rural areas.
The current mortgage interest rates for the products mentioned above are: 4.25% for the FHA 30-year Fixed-Rate Mortgage, 3.625% for the FHA 15-year Fixed-Rate Mortgage, 4.5% for the VA 30-year Fixed-Rate Mortgage, 3.75% for the VA 15-year Fixed-Rate Mortgage, and is approximately 4.25% for the USDA 30-year Fixed-Rate Mortgage.