By: Rental Realities
There has been much buzz about how low mortgage rates have been the last couple of years. Many are wondering “How low can they go?” and how long rates will remain low. In January, the 30 year fixed rate mortgage reached the lowest APR since April 2013. While rates for 30 year fixed rate mortgages are very favorable right now, they may start inching up beginning mid-year. Home prices have steadily increased in the past year. For those still in the market for a new home, there is still plenty of opportunity to take advantage of low 30 year fixed rates to help offset some of the higher home sale prices.
According to the Federal Open Market Committee statement released January 28, the Fed said it is committed to keeping short-term rates low at least until midyear. Now is a good time to lock in rates, especially for first-time home buyers. Additionally, the Federal Housing Administration recently made changes that reduces the cost of required annual mortgage insurance to borrowers who obtain FHA loans.
Because a “fixed-rate” mortgage contains an interest rate that remains unchanged throughout the entire life of the loan, taking advantage of currently low rates is enticing for new borrowers. This offers protection against rising interest rates in the future and a 30 year fixed rate mortgage offers lower monthly payments than payment amounts for 15-20 year fixed rate mortgages. Adjustable rate mortgages, or ARMs might be more tempting for borrowers would wish for lower payments for the first few years.
Not all 30 year fixed rate mortgages are equal. They can be conventional mortgages, FHA (Federal Housing Administration loans, or VA (Veterans Administration) loans. Depending on the borrower’s financial situation, each has its advantages. If a borrower’s situation qualifies them for a conventional loan, they may be able to take advantage of lower interest rates than FHA or VA loans. FHA and VA loans offer more accommodating guidelines for borrowers in specific situations.
Borrowers should take the time to honestly assess their financial situation and become aware of all the financing options available to them to find the best fit, whether they choose a 30 year fixed rate mortgage or another option. Before searching for the ideal home, borrowers should seek out a mortgage broker who is willing to find the best opportunities for their particular situation. With such life-changing decisions pending, the right mortgage broker will gladly take the time to guide and advise borrowers through the mortgage process, providing personalized attention and ensuring the borrowers are satisfied with the loan.