By educating yourself on the interest rates in the national marketplace you can hone your strategy for refinancing your mortgage. Our team at Mortgages Diversified at Summit Mortgage Corporation is highly experienced in the mortgage marketplace and within our new post, we’ll provide a guide to understanding the average mortgage rates across Minnesota.
15-year fixed mortgage
Mortgage rates can change daily, so you need to be prepared for fluctuations that happen quickly in order to lock in on the mortgage rate you are looking for. Fifteen-year mortgages tend to be a lower rate than longer-term mortgages, but will come with a higher monthly payment because you have less time to pay –off your investment. The benefit is that you would be spending less on interest, which reduces the total cost of your property.
30-year fixed mortgage
All mortgage timeframes have fluctuations in the interest rates and need to be researched and monitored when you are interested in purchasing or refinancing a home. With a thirty-year mortgage you would be spreading the cost of your investment over a longer period, thus it may make the most sense for your budget due to lower monthly payments.
What you need to know about mortgage rates
- You’ll pay less per month with a 30-year mortgage
It’s important to note that, generally, you’ll pay less per month with a longer mortgage such as 30-year mortgage than you would with a shorter option. But for the term of the loan, due to the interest paid, it is more expensive than a shorter term loan.
- The principal is paid slowly in the beginning
At the beginning of your mortgage contract, the principal is paid off slowly and most of the payments will go toward interest. You can use an amortization calculator to find out how the numbers break down when evaluating your mortgage options.
- Fixed rate mortgages are preferred when interest rates rise
In the current market environment, it’s thought that interest rates will continue to rise into 2019 and so those negotiating with the lender for a refinance now may consider a fixed rate mortgage their best option. That’s because the fixed rate will never rise and will allow the homeowner to save on their interest in the coming years.
- Variable rate an option when selling in near future
However, a variable rate mortgage is often the preferred choice of homeowners looking to sell in the next few years. Variable rate mortgages allow for more of the principal to be paid down over a shorter time, ensuring a greater return when selling the home.
Our Mortgages Diversified Team at Summit Mortgage Corporation can help you capitalize on the latest low mortgage rates in Minnesota. To learn more about your options, call today.