After some research through Cornerstone Bank and Principal Mortgage Group I have found that rates are remaining at all time lows for home loans. If you haven't thought about refinancing it might be time to do so. Many buyers and home owners I have talked to are actually going to a 15 year mortgage rather than the traditional 30 year mortgage. One saves so much money going this route. For example on a $100,000 loan you end up actually paying $162,000 over the 30 years because of the interest. The same loan only amortized over 15 years one ends up paying only $122,000. What would you do with $40,000 in savings???
The one down side of doing a 15 year mortgage over a 30 year mortgage is cash flow. That is to say you will be paying a little more each month for your loan on a 15 year than a 30 year mortgage. Using the same example of a $100,000 loan one will be paying $450/month on a 30 year loan. On a 15 year loan one will be paying $229 more a month for a total of $679/month. That $229 could be used for groceries, clothes, utility costs, vehicle costs, etc. Everyone has to look at their financial situation to see if it makes sense to go to the 15 year loan. Making some little changes to your daily spending could make up that difference and save you a lot of money in the long run.
Depending on you credit score and debts verses income rates can go up or down from these average rates. Usually lenders are looking for good credit between 680 to 720+. It is always a good idea to have the lender pull your credit to make sure it is done properly. Various loan types and their general terms are the following:
FHA Loan (Federal Housing Administration) = 3.5% down payment, 3.25% interest rate on a 30 year loan. 3.5% down payment, 2.875% interest rate on a 15 year loan. This loan type does require Private Mortgage Insurance (PMI). Generally speaking this PMI is a fee that is added to your monthly payment for 5 years or until you have paid down the loan to 78% of the original loan amount.
RD Loan (Rural Development) = 0% down payment, 3.5% interest rate on a 30 year loan. RD does not do 15 year loans.
Conventional Loan = 20% down payment, 3.5% interest rate on a 30 year loan. 20% down payment, 2.75% interest rate on a 15 year loan. Most refinances will end up going this route, however occasionally refinancing is better with previously discussed loans. Your loan officer will discuss all the pro's and con's of each type of loan.
The one down side of doing a 15 year mortgage over a 30 year mortgage is cash flow. That is to say you will be paying a little more each month for your loan on a 15 year than a 30 year mortgage. Using the same example of a $100,000 loan one will be paying $450/month on a 30 year loan. On a 15 year loan one will be paying $229 more a month for a total of $679/month. That $229 could be used for groceries, clothes, utility costs, vehicle costs, etc. Everyone has to look at their financial situation to see if it makes sense to go to the 15 year loan. Making some little changes to your daily spending could make up that difference and save you a lot of money in the long run.
Depending on you credit score and debts verses income rates can go up or down from these average rates. Usually lenders are looking for good credit between 680 to 720+. It is always a good idea to have the lender pull your credit to make sure it is done properly. Various loan types and their general terms are the following:
FHA Loan (Federal Housing Administration) = 3.5% down payment, 3.25% interest rate on a 30 year loan. 3.5% down payment, 2.875% interest rate on a 15 year loan. This loan type does require Private Mortgage Insurance (PMI). Generally speaking this PMI is a fee that is added to your monthly payment for 5 years or until you have paid down the loan to 78% of the original loan amount.
RD Loan (Rural Development) = 0% down payment, 3.5% interest rate on a 30 year loan. RD does not do 15 year loans.
Conventional Loan = 20% down payment, 3.5% interest rate on a 30 year loan. 20% down payment, 2.75% interest rate on a 15 year loan. Most refinances will end up going this route, however occasionally refinancing is better with previously discussed loans. Your loan officer will discuss all the pro's and con's of each type of loan.
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