Compare The Best Mortgage Rates in Natural Bridge, AL

Compare Natural Bridge, AL Mortgage Rates

It's always important to find the best rates possible for a mortgage when you're looking into buying a home or planning to refinance. With MyRatePlan's unique system, helping you find some of the best home loans is pretty simple. MyRatePlan will give you the tools and data you must make an informed choice about mortgages, every single time. Once you're able to compare rates for various mortgage in Natural Bridge, AL side by side, you can be more certain of not overpaying in the long run after you purchase that new home.

The Types of Home Loans Available in Natural Bridge, AL

Since there's an extensive range of different buyers out there, it makes sense that there are also quite a few different loan products on the market, including fixed-rate mortgages and variable home loans. Those are two of the most common types of mortgages, and each will suit different types of buyers.

When the buyer gets a fixed-rate home loan in Natural Bridge, AL, their interest rate stays the same throughout the whole loan term, whether that lasts for 10, 20 or 30 years. With the interest rate staying the same, the monthly payment amount also stays the same. A fixed-rate mortgage is a safe option, because the buyer never has any surprises with how much their home payment is.

As their name suggests, adjustable-rate mortgages (ARMs) in Natural Bridge, AL don't have one set interest rate. Instead, the interest rate can go up or down. The most common type of ARM is a combination of an ARM and a fixed-rate mortgage, sometimes referred to as a hybrid ARM. For an initial period, the mortgage has a fixed interest rate. After that, the mortgage's interest rate adjusts on a predetermined schedule. For example, a buyer could get a 6/2 ARM. The six means that the loan has a fixed rate for the first six years. The two means that after that initial period, the interest rate adjusts every two years. The issue with ARMs is that the borrower's monthly payment could go up.

FHA Mortgages in Natural Bridge, AL

Deciding between fixed-rate mortgages and ARMs isn't the only choice a prospective borrower must make. They also need to consider whether they want to stick with conventional mortgages or get a government-insured mortgage. With conventional mortgages, the contract is between the lender and the borrower. If the borrower defaults, the lender could lose money. With government-insured mortgages, the government is backing the mortgage and helping to cover the lender if a default occurs. This type of mortgage includes USDA loans, VA loans and FHA loans.

Federal Housing Administration (FHA) mortgages have mortgage insurance provided by the FHA, which is itself managed by the government's Department of Housing and Urban Development (HUD). With FHA loans in Natural Bridge, AL, it's not just first-time buyers that can qualify but any type of buyer. Borrowers benefit from FHA loans because down payments can be just 3.5 percent of the home's price, but on the other hand, they also need to pay the mortgage insurance every month, which makes their home payment a bit more expensive.

Refinancing a Home Loan in Natural Bridge, AL

Although the term is technically refinancing, how this process really works is the borrower applies for a brand-new mortgage, which they use to pay the previous mortgage. The point of refinancing is that the new mortgage has a better interest rate than the old one, and this means that the borrower saves money by paying less interest on the remainder of their loan. The borrower should note any extra costs that come with the new mortgage, as there could be fees and closing costs involved. It's important that they do the math to make sure they're actually saving money when those fees are taken into account. However, if the borrower is making the switch from an ARM to a fixed-rate home loan, that's always a good move because they're not at the mercy of what happens with interest rates, which tend to increase, not decrease. When refinancing a mortgage, it's important for the borrower to get their credit score over 700 and minimize their debt-to-income ratio to look as low risk as possible to potential mortgage lenders and secure the lowest possible interest rate. The good news is that even a borrower who doesn't meet all the highest standards could still find a mortgage in Natural Bridge, AL with a low interest rate.