Mortgages can be a very flustering part of the homebuying process, just based on the sheer volume of available options. Most homebuyers choose the 30-year fixed rate option, as long as they meet the criteria. But what about the 15-year option? What choices are available for homebuyers, first-time and experienced? How do you know which one to pick?
Don’t fret. Here is a quick and simple guide to four of the most commonly available 15-year fixed rate mortgages on the market:
The first option, and often the most understood, is the 15-year fixed mortgage. These mortgages have interest rates that are agreed upon before closing. These rates are fixed, meaning your monthly payments will continue to be the same throughout the loan, which gives you an easier way to budget for your monthly housing expenses.
As with their 30-year counterparts, these mortgages are subject to final approval by your mortgage lender. Your lender will factor different financial aspects, such as financial health, economic stability and Federal Reserve rates - even if they do not directly set your specific interest rate.
Jumbo mortgages are typically utilized by those who are searching for a home outside the standard loan limits. These tend to be luxury homes, and can carry a steep monthly payment, which may deepen for those hoping for a 15-year mortgage, regardless of reason.
These are often offered as specialty financing, and the terms are subject to final approval from your financial institution. If you’re working with a loan officer and fall into the category of larger or more financially extensive properties, ask them about your jumbo mortgage loan options.
FHA loans, or loans provided by the Federal Housing Administration, are usually available to those with a minimum credit score in the high 500s, such as 580. These loans typically carry interest rates around 3.5% and may be easier to qualify for, for some prospective homebuyers. They also allow borrowers to have a debt-to-income ratio of a maximum of 50%.
The terms don’t tend to change when converted or applied to a 15-year fixed rate FHA loan, however. You must still meet the minimum requirements. Depending on what’s being offered at the time, your loan officer should be able to help determine what closing costs would be best for you before finalizing on your new mortgage.
For over 25 years, Mike Johnson, has help Buyers and Sellers in Greater New Haven, and across the state turn their dreams into reality. TAJ REAL ESTATE, LLC is a full service firm specializing in Short Sale, First Time Home Buyers, Sale and marketing of existing Home and Condos, Rentals, FHA 203K Sale and Renovation of Distress Properties, and Investor Purchase.
Mike Johnson is a graduate of Fairfield University, and a resident of Connecticut for over 38 years. He served on the Board of Directors for Hill Health Corporation from 1976 to 1984, has served on the Professional Standard Committee of the Greater New Haven Board of Realtors for over 8 years, served as Board of Directors for that organization from 2009-2012, and on the Farmington Canal Committee for over 10 years.
Mike possesses a high degree of knowledge, experience and integrity, and strives for excellence, as such creating a reputation second to none. Whether your Home is under water (owing more than the mortgage balance), or behind on your mortgage and facing foreclosure, your solution is only a phone call away. Pick up the phone and put your troubles in the hands of a experienced Realtor.
