Find the Best 30-Year Fixed-Rate Mortgage

 

If you’ve just decided to buy a home, one of the most important things you need to consider even before you start house hunting is the mortgage you may qualify for. Here we don’t just refer to the interest rate and loan amount but also other aspects you should take into account in order to get a mortgage that’s right for you.

To begin with, there are two basic types of mortgage options: fixed- and adjustable-rate mortgages. While an adjustable-rate mortgage may make financial sense particularly due to the initial interest rate, which remains fixed during the first few years of the loan, a fixed-rate mortgage may be a better option if you want to live in your new home indefinitely. In this case, a fixed-rate mortgage can translate into substantial savings over the life of the loan.  

However, opting for the first 30-year fixed-rate mortgage you find isn’t always a good idea. That’s because the interest rate, loan term as well as other terms and conditions associated with mortgage products can vary greatly among lenders. To help you find the best 30-year fixed-rate mortgage, our professionals have put together a succinct guide that explains the most important things you should consider. 

Your Credit Score

When looking for a mortgage, it’s important to know that a score under 620 may stop you from qualifying for a conventional 30-year fixed-rate mortgage altogether. Additionally, a lower credit score indicates that lending to you is riskier. Therefore, some lenders may offer you a higher interest rate than borrowers with higher scores. If you have a bad credit score, getting it in shape before applying for a mortgage can help you obtain the loan amount you need as well as a lower interest rate. A few things you can do to improve your credit score is to check your credit report for errors and fix any inaccuracies you observe by filing a dispute with the credit reporting agency that issued the report. Next, it’s important to reduce your debt in order to improve your debt-to-income ratio. A lower debt-to-income ratio will increase your chances of getting a mortgage with better terms and conditions.  

The Interest Rate

When buying a home, most homebuyers are inclined to opt for lenders with the lowest interest rates. However, choosing a lender that offers a lower rate isn’t a guarantee you’ll get that rate. That’s because the interest rate depends on a series of factors, including the credit score, credit history, monthly income, loan amount, and recurring debt. To find out the interest rate you may be able to obtain, you need to apply for the mortgage you want so that the lender can offer you an interest rate based on your own credit score, credit history, and all the details on your application.

Closing costs are another thing you should take into account when looking for the best 30-year fixed-rate mortgage. Similar to interest rates, these costs can vary widely among lenders and loan programs. Therefore, you may find mortgage products with lower interest rates and higher closing costs, or vice versa. Additionally, homebuyers are typically required to pay these costs out of pocket at closing. In that case, you need to make sure you have enough money to pay the required amount in order to close on your new home. In Florida, the closing costs range between 1% and 3%, even though they can occasionally amount to 5% of the home’s sales price. This means that for a $300,000 home, you’d pay between $3,000 and $15,000 at closing.

The Type of Mortgage

Nowadays, lenders make available three main types of 30-year fixed-rate mortgages: conventional, FHA loans, and VA loans. Issued by banks or lenders, conventional mortgages aren’t part of government programs. Conversely, FHA and VA loans are backed up by the government. Even though FHA and VA loans have a more lenient credit score and income requirements compared to conventional mortgages, not all borrowers can qualify for these loans. For instance, if you intend to apply for an FHA loan, you need to know that the home must meet the FHA’s minimum property requirements. Additionally, the mortgage can’t exceed the loan amount limits for the area where the home is located. As well, the VA loans are available only to eligible veterans, service members, and their spouses. In addition, the applicant must meet the lender’s credit and income requirements in order to receive financing.

At North Florida Mortgage, we not only expect mortgage applications. We also expect and encourage potential homebuyers to ask questions. So, if you have any questions about the 30-year fixed-rate mortgages or other types of loans that we make available as well as interest rates, closing fees, time frames, or any other home financing or refinancing topics, please call us at (904) 822-7520 or email us at info@nflmortgage.com.

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