However, there could be volatility in the market, as the Fed is expected to announce a rate hike soon. In this environment, fixed-rate FHA, VA, USDA, and conventional loans can offer significant savings for home buyers.
The Federal Reserve has kept interest rates steady since the end of 2015. This has caused mortgage rates to remain at near all-time lows, as the U.S. economy continues to expand at a moderate rate. However, the Federal Reserve is expected to announce a rate hike soon, which could cause volatility in the mortgage marketplace.
Fixed-rate FHA loans are insured by the Federal Housing Administration, and are available to borrowers with less than perfect credit scores. FHA loans require a down payment of 3.5%, and typically provide more favorable terms and conditions than conventional loans. Additionally, FHA loans are assumable, meaning that the borrower can assume another person’s loan if they wish to do so. However, FHA loans have costly mortgage insurance requirements which can add to the monthly payment.
VA loans are backed by the Department of Veterans Affairs, and are available to veterans, active duty military personnel, and their surviving spouses. These loans offer no down payment requirement and do not require mortgage insurance. Additionally, VA loans provide competitive interest rates and more flexibility on repayment options. However, VA loans do have limits on the amount of money that can be borrowed.
USDA loans are issued through the United States Department of Agriculture, and are available to low-income borrowers in rural and suburban areas. These loans require no down payment, and offer competitive interest rates and loan terms. Additionally, USDA loans do not require mortgage insurance, and are assumable. However, borrowers must meet certain income requirements in order to qualify for a USDA loan.
Conventional loans are offered by banks and non-governmental lenders, and generally require higher credit scores and down payments than other loan types. However, conventional loans offer more flexibility as far as repayment terms and conditions. They also may include lower interest rates than other loan types.
In October 2017, mortgage rates will remain at near all-time lows. As the Federal Reserve is expected to announce a rate hike soon, volatility in the mortgage market is possible. Home buyers can take advantage of the current low rates by considering a fixed-rate FHA, VA, USDA, or conventional loan. Fixed-rate FHA loans offer more favorable terms and conditions than conventional loans, but require more costly mortgage insurance. VA loans are available to veterans and their families, and provide no down payment requirement and competitive interest rates. USDA loans require no down payment and offer competitive interest rates, but borrowers must meet certain income requirements. Conventional loans offer more flexible repayment terms and lower interest rates, but generally require higher credit scores and down payments than other loan types.
This article was contributed on Nov 16, 2023
