FINANCING A HOME
With mortgage interest rates at nearly all-time lows, it’s a great time to purchase and finance a home. As of today, the average 30-year fixed rate for single family homes is running around 3.5%. Just 20 years ago it was 7%.
In addition to the 30-year fixed rate loan, there are also 10- and 15-year loans with even lower rates. Besides the term of the loan, your rate will also depend on a few other factors.
- How good is your credit score?
- How much can you afford for a down payment?
- How many points will you be paying for up front?
The average down payment for a mortgage is 20%. If that sounds unaffordable to you, never fear. NH Housing has some great low down payment programs offered through affiliated lenders. And it’s never been easier to qualify for these programs. Today, borrowers generally may earn as much as $128,900 to qualify for a low down payment loan. And, these programs can be used to finance homes up to as much as $300,000.
A good place to start in determining how much home you can afford is to check out a mortgage calculator. A good one online, which is not affiliated with any particular lender is The Calculator Site, at the link below.
In addition to fixed rate loans, you may also want to consider a variable rate or Adjustable Rate Mortgage (ARM). This is a loan that moves up and down with the prevailing interest rate and is usually adjusted once per year. A “guaranteed for the life of the loan” fixed rate mortgage may start out a little higher than an adjustable rate mortgage. The lower ARM which normally resets once a year after an initial term of three, five or seven years can go anywhere, up, down or sideways. If you’re planning on staying in the home for the long term, and considering that rates are so low, you’re probably better off staying with a fixed rate loan. However, if you are certain you’ll move, refinance or pay off the mortgage before the guaranteed rate on an ARM expires, the adjustable rate mortgage may be a good option. Keep in mind however, that if you stay in the home, the interest rates available for a refinance once the rate of the ARM expires, could be considerably higher.
An experienced mortgage originator will be able to provide you with expertise on all the options for financing your new home. And at John R. Coughlin Realtors, we’ll help you find that mortgage originator, and help guide you through the process.
With mortgage rates so low, and with lots of options for financing the mortgage, this is an opportune time to become a first time home buyer, to simplify your life and move to a different home, or to upgrade to the home of your dreams.