A mortgage rate is the interest rate you pay on your mortgage loan. Mortgage rates change daily and are based on fluctuations in the market, but they're at historical lows currently. Depending on your loan type, your interest rate could be a fixed interest rate or an adjustable interest rate throughout your mortgage term.
If you're in the market for a mortgage, you may want to lock in your rate sooner rather than later as they do change every day and could potentially increase.
30 Year Fixed Mortgage Rates
In a 30 year fixed mortgage, your interest rate stays the same over the 30 year period while you repay the loan, assuming you continue to own the home during this period. Such mortgages tend to be some of the most popular type of home loan thanks to the stability and lower monthly payments they offer borrowers compared to 15 year fixed mortgages.
Take a look at our Mortgage Payment Calculator to find mortgage rates today and learn how much home you can afford!
With a 30 year fixed mortgage, borrowers have the advantage of knowing the mortgage payments they make each month will never increase, allowing them to budget accordingly.
Each monthly payment goes towards paying off the interest and principal, to be paid in 30 years, thus these monthly mortgage payments are quite lower than a shorter-term loan. You will, however, end up paying considerably more in interest this way.
Qualifying for a 30 Year Fixed Mortgage
Those applying for a 30 year or 15 year fixed mortgage will first be required to be preapproved.
Why you should have a credit preapproval:
- Save time by only looking for properties that fall in your price range
- Build credibility with sellers by demonstrating you are serious about buying and are qualified to do so
- Get faster funding for your loan by accelerating the closing process
- Have a better home buying experience
"What do I need to refinance my mortgage with a fixed rate loan?"
- Proof of income
- Copy of your homeowner's insurance to demonstrate you have proper coverage
- Information regarding assets such as bank statements, 401K, and other investments
A 30 year mortgage could be very beneficial, but you need to consider how long you plan to stay in your new home. If what matters most to you is having lower mortgage payments each month, you should consider a 30 year fixed rate mortgage with the help of a loan officer.
15 Year Fixed Mortgage Rates
The interest rate is lower than a 30 year fixed mortgage. However, your monthly payment is higher than a 30 year mortgage because your repayment period is shorter.
Common reasons given for pursuing a 15 year fixed mortgage include wanting to pay off your home before having to begin paying tuition or wanting to retire early.
As with 30 year fixed rate mortgages, you are afforded the security of knowing your monthly mortgage payments will not increase regardless of what the market does, and thus you can better budget for said payments.
A 15 year fixed mortgage is often the first choice for first-time home buyers or those looking to refinance their existing mortgage.
Options for a 15 year fixed include:
- Purchase and refinance
- Government insured (FHA, VA, USDA)
- Conventional (Fannie Mae, Freddie Mac)
Take a look at mortgage rates today and contact a loan officer to see if a 15 year fixed mortgage is right for you!
FHA 30 Year Fixed Mortgage Rates
With an FHA 30 year fixed mortgage, you can purchase a home with a lower down payment and flexible lending guidelines or streamline refinance with less documentation than a traditional loan.
FHA loans are backed by the Federal Housing Administration, that is, the federal government insures them. Rather than issuing mortgages, the FHA offers insurance on mortgage payments so that more people can get the financing they need to buy a house or refinance. However, borrowers are required to pay Upfront Mortgage Insurance and monthly mortgage insurance when obtaining an FHA loan.
Do I qualify for an FHA loan?
- You do not need perfect credit
- Down payments are generally low
- 30% housing ratio
- Higher standards when it comes to home inspection
- You can obtain max financing with a 580 FICO credit score
- Gifts are permitted towards the down payment
- Some of the closing costs can be covered by sellers, builders, or lenders
For FHA 30 year fixed rate loans, there are low down payment options, gifts are allowed, Streamline Refinances are permitted and there are no penalties for repayment.
VA 5/1 ARM Mortgage Rates
Interest rate offered for active duty military, veterans, and certain military spouses. These mortgages are often perfect for those in the military who can save money with an ARM loan such as those who anticipate receiving PCS (Permanent Change of Station) orders in 5 years.
What is a 5/1 ARM?
This is an adjustable rate mortgage (ARM) where the interest rate is fixed for the first five years and then changes with each proceeding year, hence 5 years at the initial interest rate and changes to the interest rate every 1 year.
Typically, the initial 5 year mortgage interest rate is generally lower and changes thereafter with any potential increases in interest rate based on various economic and market factors.
5/1 ARMs are great for those who anticipate selling their home prior to the expiration of the introductory interest rate.
With VA ARMs, the government-mandated cap means:
- Your interest rate will increase no more than 1 percent during the first adjustment
- Subsequent adjustments cannot increase more than an additional 1 percent
- The interest rate increase cannot exceed more than 5 percent during the life of the loan
Again, if you are likely going to PCS within 5 years, a 5/1 VA ARM might be a great opportunity to save money on your monthly mortgage payment.