By Home Media
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If you’re looking to purchase a home, there is a high probability that you will have to take out a mortgage. A mortgage is often paid (with interest) over the course of multiple decades, so it is worth investigating and making sure you’re getting the best rates.
In this article, we’ll discuss what a great mortgage rate looks like and explain the process for approval and qualification for a mortgage. At the end of the article, we’ll recommend a few companies in case you’re ready to start your research right away.
What is a good mortgage rate?
Interest rates and APRs are comparatively low right now, so we pulled some average interest rates and APRs from Zillow, which are current as of January 13, 2021. Listed below are some of the most common conventional mortgages and their current rates:
Best mortgage lenders
We never recommend one-stop shopping. After all, there are hundreds of reputable mortgage lenders, and taking your time and seeking several quotes will help you get the best rate. We’ve listed below some national providers with competitive rates. We’ll also include some more specific information about each to further assist you in your search. These numbers reflect requirements for a conventional loan. You may qualify for a government-backed loan with a lower credit score than is listed here.
What is a mortgage?
A mortgage is a loan on a home, consisting of a principal and interest rate. Interest rates can vary and change, due to the fact that the market is always changing. Changes in interest rates can be brought about by changes in the general economy, and there are a variety of other factors that affect the current landscape.
Mortgages can be paid in many different ways. The two most popular mortgages are fixed-rate mortgages and adjustable-rate mortgages (ARMs). A fixed rate mortgage can be taken out for any number of years — usually between 10 and 30 — and locks in your interest rate for the duration of your loan. An adjustable rate mortgage is a mortgage with a short window of time where your interest rate will stay the same. After this initial adjustment period, your loan is then subject to change over time.
What do I need for a mortgage?
Before you actually agree to the terms of a mortgage, you’ll likely need to get pre-approval. A pre-approval letter from a lender indicates that you are able to pay back your loan in a timely manner. The pre-approval process includes several items, such as:
Debt to income ratio
Pay stubs and W2 forms
Intended mortgage loan amount