If you are shopping for current mortgage rates in Texas, you understandably want to find the best loan possible. For many consumers, this means finding the lowest rate possible that generates the most affordable monthly payment. However, interest rates for Texas mortgages are affected by credit scores, loan amount, property type, what type of loan you select and more. With a closer look at some of these factors, you will be able to set up the right type of mortgage in Texas for your needs.
Different Types of Loans Available
A mortgage is essentially a loan that is secured by your home. It may be used to buy the home or to refinance the home. There are two types of refinances: You can simply refinance the balance(s) of your current loan(s) or you can apply to take equity out of your home. How much equity you can extract depends on loan guidelines, government regulations and your credit profile. Generally, however, you may be able to borrow up to 95 or 97 percent (and sometimes 100%) on a purchase loan and up to 95 percent on a refinance loan and 80% if you wish to take equity out of your home.
How the Term Length Affects Mortgages Rates
If you want to find the lowest interest rate possible, it may be necessary to opt for a shorter term. Generally, the lowest interest rates for home mortgages are available for individuals who have a great credit score and who opt for a 15-year term rather than a 20 or 30-year term. The longer the term is on your mortgage, the higher the interest rate will be in most cases. However, the term that you select can affect your mortgage payment. For example, while a 30-year term may have a higher interest rate, the longer term may yield lower monthly mortgage payments in most cases. A smart idea is to get rate quotes and monthly payment estimates for each option to determine which is right for you. Remember that you will pay more in interest over the life of the loan when you select a longer term.
When to Get a Fixed Versus Adjustable Rate
It is important to pay attention to whether your mortgage rate in Texas will be fixed or adjustable. An adjustable rate may changes once per year after a fixed period of time. With a fixed interest rate, the loan payment and rate will remain the same throughout the life of the loan. Generally, an adjustable rate is a smart idea if you plan to sell or refinance within a few years or if you expect interest rates to decrease within the next few years. If you opt for an adjustable rate, pay close attention to the maximum rate and payment that the loan can adjust to. You should be able to afford a worst-case scenario. If not, it is safer to opt for a fixed rate loan.
Applying for a mortgage in Texas can seem complicated. There are some terms and concepts that you need to learn about and understand before you apply. However, once you understand more about the points discussed here, you will be able to make a more informed decision about which loan you should apply for.
Contact Austin Mortgage Lender Joel Richardson
For more information or questions about mortgage rates in Texas call Joel Richardson today at (512) 637-0932 or fill out the online contact form.