Buying a large piece of property, such as a house, a vacation home, or any other real estate can be very expensive, and with a few exceptions, buyers are going to take out a mortgage on that property, and a mortgage company can help any buyer get the right financing for a new property and get everything settled fairly. Current mortgage rates may vary from one company to another, and may be based on a buyer’s credit score or the area where they buy. Purchasing a home in urban San Francisco, for example, will feel very different from buying a small house in a rural town. Buyers from New England to the West Coast can find deals locally, and Washington mortgage rates for properties in Seattle, for example, can be taken care of with local companies. What are the most current mortgage rates? How does a mortgage help finance a house? What type of mortgage is best?
Types of Mortgages
A mortgage company may offer one or more mortgage types for buyers. One type that a mortgage company may offer is an adjustable rate mortgage, or ARM. This sort of mortgage will have an interest rate that starts stable, then can become variable over time during the repayment period. These mortgages may have lower interest rates than other types. Another major type is a fixed rate mortgage, nearly the opposite of an ARM. In this case, the interest rate is fixed, and the loan period will typically be 15 or 30 years. This offers the convenience of a predictable and consistent payment each month, though the interest will be higher than in an ARM. In this mortgage type, interest is higher for a 30 year plan than the 15 year plan; the end total is higher for the 30 year plan, but being in a much longer time frame, the 30 year plan has smaller payments per month. A buyer with a more robust monthly budget may choose the 15 year plan, while a more patient buyer will typically opt for the 30 year plan instead.
Hunting For Deals in a Mortgage Company
Whether choosing an ARM or fixed rate mortgage, or whether paying off a property sooner or later, there are some steps for a buyer to take, and some preparation to make before and during a search for a mortgage deal. Mortgage rates may be heavily affected by these variables, and mortgage lenders may look for certain things in customers. Some are listed here.
According to Forbes, there are at least six basic steps a property buyer can take for finding a good mortgage company to work with. To start with, a buyer’s credit score is a major factor, with a higher score meaning a lower interest rate and better odds of getting a loan. The bare minimum of the credit score could be as low as 500, but 620 is a common minimum, and 760 and higher is a comfortable range. Those with low credit scores may not qualify for loans at all, knocking them out of the game entirely.
Buyers with a solid recent history of employment are better off. A mortgage company is comfortable with a buyer who has had employment for the last two years without a drop in earnings, while long periods of unemployment hurt a buyer’s chances. Self employed buyers will have to submit documentation of business income and fill out the right paperwork for the IRS. Aside from that, paying 20% of the property’s value is a down payment is a good idea, and can even lower interest rates. A mortgage company will consider such a buyer as low risk, while someone who pays just 5% down may be high risk, and will have higher interest rates.
A buyer can not only have all their paperwork and finances in line, but will also do comparison shopping, contrasting different mortgage companies with each other in terms of required credit score, interest rates, availability of different plan types, and more. Even if a good deal is found at one mortgage company, a better deal may be found elsewhere. Buyers are encouraged to exhaust most or all of their options and find the best one for their new property’s mortgage.