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Our free calculators can help you make sense of your next home loan.
We’re currently working on upgrading our mortgage calculators, but these calculation guides are still available:
A mortgage is a loan that helps you buy or refinance a property, such as your primary residence, a vacation home or a real estate investment.
The amount that you borrow is called the principal. When you take out a mortgage, your lender charges you interest on the principal each month. The interest is the lender’s profit, which is rolled into your monthly payments. For fixed-rate mortgages, your loan payments gradually pay off both the principal and interest based on an amortization schedule that keeps your payments the same each month.
A home loan is secured using your property as collateral. That means if you miss your mortgage payments, your lender can take your property and resell it to get their money back.
To determine how risky you are a borrower, mortgage lenders consider financial criteria such as your credit score, proposed down payment, assets, debt and income. These details help a lender assess your likelihood of paying back the loan, which ultimately determines approval and your mortgage’s interest rate.
The best mortgage for your situation should meet your needs while providing the lowest rates and terms you’re eligible for.
Look to our six tips to landing the strongest mortgage rates you’re eligible for:
Most mortgage rates are either fixed or adjustable. Fixed-rate mortgages offer a predictable payment each month, while adjustable-rate mortgages fluctuate with the market.
Great for long-term budgeters. A predictable fixed-rate mortgage helps you know exactly how much you’ll pay each month of your term.
Fixed-rate mortgages lock in an interest rate that’s applied over your full loan term of 10, 15, 20, 25 or 30 years. Unlike an adjustable-rate mortgage, your monthly payments don’t change over the course of your loan.
Predictable payments make for easy budgeting, and most mortgages allow you to apply toward your principal any amount you pay over the required amount.
Great for short-term borrowers. If you plan to refinance or sell your home during the fixed period, an adjustable-rate mortgage, or ARM, can extend a lower rate than a fixed-rate mortgage during an initial fixed term — but avoid the adjusted rate that could significantly raise your monthly payment.
Adjustable-rate mortgages come with an initial interest rate that resets to the prevailing rate after a time specified in your loan contract. Unlike a fixed-rate mortgage, your payments rise or fall depending on the current market rate. But lenders typically cap how high or low your rate can go.
A hybrid ARM is a type of adjustable-rate mortgage that begins with a fixed rate that’s followed by an adjustable-rate period. After a term of five to 10 years, your rate adjusts to match market conditions — raising or lowering your monthly payment.
You can get a mortgage from most banks and credit unions and through brokers that work with networks of lenders looking to connect with borrowers. Most lenders require at least some footwork with a loan officer by phone or in person, but at least a few newer digital companies advertise fully-online mortgages.
Of the many types of mortgages advertised, most fall into two general categories: conventional and government-insured.
Conventional mortgages are loans designed for purchasing property that are not offered or backed by a government entity. Because they conform to limits set by government housing agencies, they attract low interest rates. But they come with fewer of the perks — like low down payments — offered through FHA and other government-backed loans.
Two main types of conventional loans are:
The Federal Housing Administration backs FHA loans designed to help first-time or lower-income homebuyers who don’t have the hefty savings required for a down payment. These loans allow financing of up to 96.5% of a home’s value and accept lower credit scores than other mortgages. Because of the lower down payments that don’t meet the 20% threshold required to avoid it, they also require private mortgage insurance — or PMI — an additional cost that protects lenders from default.
Military members and their families may be eligible for a mortgage backed by the US Department of Veterans Affairs without having to pay money down or mortgage insurance. Other benefits of a VA loan include low interest rates and no prepayment penalties.
The US Department of Agriculture insures USDA home loans designed for low- to medium-income borrowers buying real estate in an eligible rural or suburban area.
As the name suggests, interest-only mortgages allow you to allocate your monthly payment toward your loan’s interest only for the first five or 10 years of your term.
They offer smaller payments than a traditional mortgage, but those payments won’t reduce your loan’s principal. Many interest-only loans also require a large “balloon” payment at the end of your interest-only term and refinancing to pay off what remains. Despite this, they can be an option for properties you don’t intend to own long.
Fees vary by bank and loan, but common fees come down to establishing your risk as a borrower, your potential property’s value and the costs of transferring ownership of your new home. Your lender may also pass along attorney, postal and other administrative fees.
|Credit report fee||$30–$40||Gives your potential lender an idea of their risk in taking you on as a borrower.|
|Appraisal fee||$300–$500||Proves that your property is worth the sale price and protects the lender if it needs to sell your property to recoup costs.|
|Origination fee||0.5%–1% of loan amount||Administrative fee for processing your loan application.|
|Title insurance fee||$1,000–$5,000||Paid at closing, the lender’s title insurance protects the lender, while the owner’s title insurance protects you.|
|Title search fee||$75–$100||Determines whether a seller has the right to sell a property to a buyer.|
|Survey fee||around $350||Required in select states to ensure that property lines and boundaries are correct.|
|Closing fee||2%–5%||Fee to the attorney or company handling your closing.|
|Private mortgage insurance||0.3%–1.2% of loan||Kicks in as a monthly payment if you put down less than 20% of your purchase price.|
|Inspection fees||$200–$400||Uncovers any nasty hidden surprises within your new home.|
|Homeowners insurance||$300–$3,000, yearly||Required for mortgages as part of your monthly payment or paid separately with proof you’re covered.|
|Points||1% of the loan||Optional cost that reduces your interest rate, saving you money on your monthly payments.|
While other factors might affect the mortgage process, such as the type of loan, these are generally the steps borrowers take when buying a home:
Buying a house is among the biggest — and most exciting — investments most of us will make. Set yourself up for long-term success by narrowing down the type of mortgage that fits your needs, budget and property. A strong rate and term can provide peace of mind and save you thousands over the life of your mortgage.
The lack of transparency on certain types of loans makes this bank difficult to research.
Find out your monthly payments with this FHA mortgage calculator.
Access your equity through a partnership that shares in your home’s appreciation — or not — over 10 years.
You can refinance your mortgage as often as it makes sense.
Find out how it works and if it makes sense for your current situation.
Removing clutter, repainting and updating fixtures can help increase your appraisal value.
You may still qualify for a mortgage refinance with damaged credit.
A no-closing-cost refinance has zero upfront fees, but may still cost you.
Hawaii mortgage rates typically come in slightly below the national average.
Mortgage rates in New York generally fall below the national average and don’t vary much between loan types.
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