Buying a Home

30-Year Fixed Mortgage Rates and Home Loan Options

Jul 13, 2018, 12:28 PM | Sarah Woodbury
An attractive home that can be purchased with a 3-year fixed mortgage

Mortgage loans come in all shapes and sizes, but one of the most common is the 30-year fixed mortgage. It offers one of the lowest monthly payment options of all conventional loans and provides payment stability, both of which are very attractive to borrowers.

But that doesn’t mean you should immediately go for it. Stick with us as we discuss 30-year fixed mortgage rates as well as other options you may want to consider.

What Is a 30-Year Fixed Rate Mortgage?

A 30-year fixed rate mortgage is a home loan that is paid off over a period of thirty years. Its interest rate does not ever fluctuate, staying constant for the entire life of the loan.

Unless otherwise stated, in this post, “30-year fixed rate home loan” refers to a conforming conventional 30-year fixed rate loan. A conforming conventional loan is a loan offered by private lenders backed by investors and government-sponsored enterprises Fannie Mae and Freddie Mac. These loans are not insured by the government (as in FHA, USDA, and VA loans).

There is one section in this post that discusses non-conventional and government-backed versions of the loan, but we’ll be clear about when that is.

30-Year Fixed Mortgage Rates

Rates for this type of loan depend on multiple factors, including:

  • National Rates – Rates are constantly changing with the national market. This is due to the fluctuating financial climate and things like inflation. These rates will affect current mortgage rates.
  • Your Qualifications – Qualifications like credit score or assets will influence what kind of rate a lender will be willing to give you. Generally, more desirable qualifications—like a higher credit score, a lower debt-to-income ratio, solid employment, or a higher down payment—will get you lower interest rates.

For more information on current rates, talk to a mortgage professional.

30-Year Fixed Mortgage Rates in 2018

Rates for this type of mortgage hovered just below 4% at the beginning of the year, but, as forecasters predicted in 2017, they’ve climbed to 4.4% as of February 2, 2018. This may seem small, but it makes a huge difference in the price of a loan.

For example, if you took out a loan a few months ago for $150,000 at a 3.9% interest rate, the total cost of your loan would be around $254,000. If that same loan for $150,000 is made today at the 4.4% interest, the total cost would go up to $270,411. That’s a $15,480 difference.

And the predictions for 2018 were that rates would reach 4.4% by the end of the year. If they’ve already reached the highest levels in four years, it’s alarming to think how much they could rise in the many months left in 2018.

To take advantage of rates today—before they rise even more—contact us today to see what we can do for you.

And to check out a great rates chart, visit this website. It will help you get an idea of the pattern of rates in the US.

30-Year Fixed Rate Mortgage Options

When you hear about a 30-year fixed loan, it’s often referring to a conforming conventional loan. However, there are also non-conforming conventional loans and government-backed loans that offer 30-year fixed rate options.

Some of these loan types include:

  • Jumbo Loans – Jumbo loans are loans that allow you to take out a loan for an amount larger than the loan limits for your area. This does not conform to Fannie Mae and Freddie Mac’s guidelines, so they are kept by lenders or purchased by investors.
  • FHA Loans – (FHA) loans are loans that are backed by the Federal Housing Administration and offered to borrowers that don’t meet guidelines required by other payment (like credit score or amount of down payment they can pay). These are a great loan option for many first-time home buyers.

  • USDA Loans – USDA loans are loans that are guaranteed by the Department of Agriculture (USDA) and offered to low to moderate income residents of eligible rural areas.

  • VA Loans – VA loans are loans that are guaranteed by the Department of Veterans Affairs (VA) and offered to qualifying veterans and their spouses. They require no down payment or private mortgage insurance. They’re a great benefit for veterans.

Alternatives to the 30-Year Fixed Rate Mortgage

15-Year Fixed Rate Mortgages

One alternative to the 30-year is the 15-year fixed rate mortgage, which works better for some borrowers.

Though 15-year fixed mortgages require a higher monthly payment than 30-year fixed loans, you’ll pay a lower interest rate and will pay the loan off more quickly. It may be a good option if you want to have full equity in your home sooner and don’t mind paying higher monthly payments for a shorter amount of time.

Adjustable Rate Mortgages

Though 30-year fixed rate mortgages offer stability, adjustable rate mortgages (ARMs) are another option that do not have a fixed rate, but rather offer a rate that can change with current national rates.

ARMs often have a period of time at the beginning (such as 5 years) where rates are fixed and are quite low. After that, however, ARM rates can rise and dip depending on what the national rates are doing.

For borrowers who plan to leave their home within a few years, are confident that rates will decrease in coming years (as well as the ability to pay higher rates in case they don’t), or plan to refinance in a few years, an ARM can be a good option.

Making the Decision

Deciding what mortgage type and lender to go with is no small task. With so many types of loans out there, it can feel overwhelming.

Mortgage professionals are there to help. They can look at your unique circumstances with you and help you find options that will be best for your situation. But, let us give you a word of caution: rates, terms, and fees can vary widely between lenders, so be sure to talk to multiple lenders so that you know you’re finding the best deal.

Elevate Your Home Buying Experience

For some of the lowest rates and best customer service out there, we at Elevate are here to help.

At Elevate, we know that experience of becoming a homeowner can be rewarding as long as you have the right people at your side. Our team members not only have years of experience, but also care about the individuals they work with. We strive to help each client understand the process so they can get into the right home with the right loan.

For more information or to get started on a loan, give us a call at 801-895-7230.

Sarah Woodbury