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A man and a mortgage broker work together while buying a home.

June is National Home Ownership Month, celebrating the value owning a home can bring to a family, a community, and a neighborhood. However, navigating the home buying process—especially understanding what a mortgage is—can be quite the challenge.

Thankfully, you’re not alone in this journey. The friendly team of experts at Landmark National Bank is here to guide you through the process of buying a house. This guide will provide valuable insights into current mortgage rates, the many types of mortgages, and essential real estate tips for first-time homebuyers to make informed decisions every step of the way.

What Is a Mortgage?

A mortgage is a loan used to purchase a home, with the property as collateral. Understanding current mortgage rates is crucial as they directly impact your monthly payments and the overall cost of the loan. 

As of mid-2024, mortgage rates have fluctuated slightly but remain around 7%. Experts anticipate rates may drop throughout the year and into the future, but it’s essential to understand your homeowner goals.  Adjustable-rate mortgages traditionally offer lower rates than fixed-rate mortgages, and may be a better fit for your plans.

Types of Mortgages

Choosing the right type of mortgage is vital for your financial well-being. Here’s a breakdown of how to determine which mortgage option is right for you:

Government-Backed Loans

Government-backed loans, such as FHA loans, VA loans, and USDA loans, are designed to help specific groups of people, including first-time homebuyers, veterans, and rural residents. These loans often require lower down payments and have more lenient credit requirements.

Conventional Loans

Conventional loans are not backed by the government and are typically offered by private lenders. They often require higher credit scores and down payments but can offer competitive interest rates and flexible terms.

Fixed-Rate Loans

Fixed-rate loans maintain the same interest rate throughout the life of the loan, providing predictable monthly payments. This stability makes them popular among homebuyers who plan to stay in their homes long-term.

Adjustable-Rate Loans

Adjustable-Rate Mortgages (ARMs) have interest rates that can change periodically based on market conditions. Initially, ARMs often offer lower rates than fixed-rate loans, but the rates can increase over time, leading to higher monthly payments.

Jumbo Loans

Jumbo loans exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). These loans are designed for high-value properties and usually have stricter credit requirements and higher interest rates.

How To Qualify for the Best Rates

One of the most valuable real estate tips we can provide is to seek out the best mortgage rates possible. If you’re wondering how to qualify for the best mortgage rates, consider the following factors:

  • Credit score. A higher credit score can significantly improve your chances of securing a lower interest rate. Aim for a score of 720 or higher.
  • Down payment. A larger down payment reduces the loan amount and can help you obtain better rates. Strive for at least 20% of the home’s purchase price.
  • Debt-to-income ratio. Lenders prefer a lower debt-to-income ratio (DTI). Keep your DTI below 36% to appear as a reliable borrower.
  • Employment history. Stable and continuous employment demonstrates financial reliability to lenders.

Home Buying Season Tips To Keep in Mind

This is a competitive season for homebuyers. Here are some house-buying tips to navigate the market successfully:

  • Get preapproved. Obtain a mortgage preapproval to demonstrate your serious buying intent to sellers.
  • Work with a real estate agent. A knowledgeable realtor can provide invaluable insights into local market conditions and help you find the best deals.
  • Set a budget. Determine your budget and stick to it to avoid overspending in a competitive market.
  • Act quickly. Desirable homes can sell fast due to high demand. Be ready to make a swift offer when you find the right home.
  • Be prepared to negotiate. In a hot market, being flexible and willing to negotiate can make your offer more attractive to sellers.

Get Expert Advice From Landmark National Bank

As you maneuver your way through the complexities of the homebuying process, you must equip yourself with the right information and financial resources. Landmark National Bank offers personalized assistance and convenient home loan options that can help get you the keys to your dream home. Use our quick rate calculator to understand what type of mortgage rate you may qualify for.

Are you ready to get started? Contact Landmark National Bank today or find a branch near you to set yourself on the path toward comfortable and financially sound living.

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