• Adjustable Rate Mortgages (ARMs)
• Conventional Fixed-rate Mortgages
• FHA & VA Loan Programs
• Construction and Renovation Mortgages
• Stated Income Loans and Other “no doc” Loans
• First and Second Mortgage Combination Loans

Conforming versus non-conforming loans

If your loan amount is more than the conformingloan limits, your loan interest rate might increase. The conforming loanlimits are set by federal agencies and adjusted every year. Currently,the limit is $320,000 - so if your loan amount (not home value amount)is more than that, you will likely pay a somewhat higher interest rate.

Home loan interest rates: risk versus reward

When determining an interest rate, a mortgage company must considerdifferent types of risk. One type of risk is the likelihood that aparticular borrower will pay back the loan in a timely manner. This iswhere a good credit history can be important; if you credit is less thanperfect, you may get a higher interest rate or have to pay more closingcosts.Another important factor is debt to income ratio. A borrower with a highlevel of debt is seen as statistically more likely to default on loanpayments. The added risk for this type of situation means the lendinginstitution will need to charge a higher interest rate.

Another type of risk is the anticipated future market interest ratefluctuations. When making long term loans, a lending institution musttry to anticipate what might happen with the market interest rate overthe lifetime of a loan. The longer the loan, the greater the uncertaintyabout what may happen to rates over the period of the loan.
One way to secure a lower interest rate is to choose a shorter termloan, such as a 15 or 20 year payback period. Mortgage companies cangenerally give a lower interest rate for these loans, because there is ashorter period of time for market interest rates to fluctuate.

Home purchases made with little or no downpayment are also seen as riskier by lending institutions. If a borrowerwere to default on a loan where there is no equity, then the bank ismore likely to lose money through the foreclosure process. This addedrisk corresponds to higher interest rates for loans with a low downpayment. So the best rates can be obtained with a minimum 20% down.

One more thing to keep in mind when looking forthe best interest rate is closing costs. Many mortgage companies havestarted paying some or all loan closing costs in order to attractcustomers. But you actually end up paying those costs through a slightincrease in interest rate.

Debt to income ratio will also have an affect onyour interest rate. If you have a lot of debt, you may be seen as ariskier prospect, and therefore you will get a higher interest rate. Tryto pay off all other debt in order to get the best possible homemortgage rate.

As there are many types of borrowers withdifferent needs, mortgage lenders have created many loan programs to tryto meet those needs. Here are some of the most common types.