Locking in Mortgage rates: question for a young adult/novice

Search Fixed Rate Mortgage

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there are Adjustable Rate Mortgages (ARM) out there, but they aren't as popular now as they were before the housing crash.

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Unless you will sell in the very short-term, you wouldn't want one now since we are at the bottom of the rate cycle.

Like the above posters said, fixed rate. Don't let someone talk you into a ARM or balloon payment in this rate environment without knowing what you are getting into. Lock it in long-term.

Banks that sell mortgages will be okay with 30 year loans. Banks that keep mortgages in house will push for 15 year loans.

I'm partial to 30 year loans at the slightly higher rate and paying it off on a 15 year amortization. That way the lower payment is always an option. But that's just me.

In most cases, you can't go wrong with a 15 year fixed rate mortgage.

As others have said, a fixed rate mortgage is fixed throughout the life of the loan. You can get adjustable rate mortgages (ARMs) too but with rates this low that would not be smart.

I am doing a refi right now and am getting the 30 year, not the 15, and I have no intention of prepaying it either. Your return from paying it down is your rate times (1 - your tax bracket), these days that's 2.5 - 3%. That is a pretty poor return for prepaying - once you subtract inflation that could even be a negative return! And a 15 year is worse. Stick with a 30.

Historically prepaying was a better idea, b/c rates were higher it made more sense to do so. Now you should get the 30 year fixed and if you move out rent the property.

First of all, if you are interested in buying a home, you need to get pre-approved. The loan officer will go over loan types, down payment options and interest rates with you. Once you put a contract on a house, you can lock in a rate.

Closing costs will depend on where you get your loan. Since your loan amount will be so low, you may be better off going to a bank. You will need to put 20-25% down plus about another $4-5K in CC's and prepaids. Insurance and taxes will be based on location and of course, no homestead exemption on rentals. Interest rates are great!