Are you looking to buy a home in Reno, NV? If so, the first thing you'll need to consider is which mortgage to get.
As of October 2024, the average 30-year fixed rate in Reno has an APR of 6.250%. However, not every homebuyer should settle for a 30-year mortgage. For instance, you may benefit from:
- Shorter loan terms
- Different loan types
- Another lender
Not sure how all these factors influence mortgage rates? This short guide will help you make sense of it all!
Fixed vs. Adjustable Mortgages
Mortgages come in two main types: fixed and adjustable. Though you can refinance one type into the other, it's still important to pick the right one for your needs.
Fixed Mortgages
As the name implies, a fixed-rate mortgage comes with the same interest rate for the life of the loan. Thanks to this predictability, you won't need to rely on mortgage rate predictions to get a good deal.
If you're buying a home you'll live in for a while, a fixed mortgage will likely be your best bet. The price for this comfort is that fixed mortgages tend to come with higher interest rates than adjustable mortgages.
Adjustable Mortgages
Most adjustable-rate mortgages (ARMs) have an attractive introductory rate. After some time, however, the rate will change depending on the loan terms. Your rate can also fluctuate depending on the ARM index.
The main issue with ARMs is that they can shoot up once the initial rate elapses. There's a limit to how much the payments can increase, but this isn't ideal protection. This is why ARMs are better for people who expect to move down the road.
Factors That Affect Mortgage Rates
Beyond the loan type, several other factors can affect your mortgage rate. Here are some key examples:
Loan Program
Your loan program can make all the difference. For example, conforming loans tend to have lower rates than their nonconforming counterparts. They're issued by banks and lenders but are generally purchased by Freddie Mac and Fannie Mae.
You can also try to qualify for government-guaranteed loans. These loans often target a specific demographic, such as people with a below-average credit score. The three main types of government-issued loans are:
- FHA loans
- USDA loans
- VA loans
Down Payment
As far as current mortgage trends go, down payments keep becoming more important. The higher your down payment, the better the deal you'll get. And if you're buying an investment property, you'll need at least a 15% down payment.
Credit Score
Your credit plays a key role in your real estate financing options. For best results, try to improve your credit score before you apply for a loan. Some ways to do that include:
- Pay down revolving account balances
- Diversify your types of credit
- Limit new credit applications
Making Sense of Mortgage Rates
A mortgage will likely be the biggest loan you'll ever take, so getting the wrong one can be a major setback. The above guide will help you find the right mortgage rates for your circumstances.
Ready to buy a home in Reno, NV? At PMI Reno, we'll use state-of-the-art technology to conduct a targeted housing market analysis and find the ideal home for you. Start by using our mortgage calculator to see how much house you can afford!
