Mortgage and Refinance Rates in Missouri
Shopping for Missouri mortgage rates can seem like a challenge, but it's a manageable one. The key is that you don't just want to find the lender with the best Missouri mortgage rates, but the one who has the best rates for you personally.
Missouri mortgage lenders offer lots of different types of home loans, with pricing that differs not only from loan to loan but from borrower to borrower as well – the rate and fees you pay will depend in part on your profile as a borrower. That's in addition to loan pricing that varies among Missouri mortgage lenders themselves. So the lender who has the best rate and terms for your neighbor or cousin may have not the best deal for you.
So how to find the best deal on Missouri home loans for you? There's a lot of information on this web site, MortgageLoan.com, to help you learn the ins and outs of being a mortgage borrower, and tools like mortgage calculators to help you find the best loan for you. But we'll run down some of the major points below.
In a hurry? Use the form at the top of this page to request free, personalized quotes for Missouri mortgage rates tailored specifically for you from multiple lenders – and start your comparisons there. Choose from home purchases, mortgage refinancing or home equity loans.
What's your budget?
This is the first question to ask yourself when thinking about any kind of home loan. What can you afford? The answer to that will have a big effect on the type of loan you choose and the rate you end up paying.
In setting a budget, don't just think about how much you can afford to pay per month. Think also about how long you want to make those payments. Stretching your payments out longer will allow you to borrow more and get you a lower monthly payment, but it also means paying a lot more in mortgage interest. And the longer you're making payments, the longer that chunk of your budget will be tied up and unavailable for other things.
You have to think about your budget when refinancing a mortgage as well. Because mortgage refinance rates for shorter loans are lower than on longer ones, many borrowers seek to trim a few years off their mortgage when refinancing – 15-year mortgages are popular choices for this. But you want to be sure you don't shorten your loan so much that your new monthly payments become a strain on your budget.
About Missouri Home Loans
When shopping for Missouri mortgages, don't make the mistake of just focusing on the mortgage rate. That's only part of the picture. The closing costs and other fees you pay are a big part of it too.
Some lenders will offer a low mortgage rate but offset it with higher fees that more than make up the difference, when it comes to the total cost of the loan. A better indicator of the true cost of a loan is the APR, or annual percentage rate, which expresses both the rate and fees in terms of an annual interest rate. The higher the number, the more you pay. APR isn't as useful with adjustable-rate loans, though, as the rates may vary. In that case, it's better to use a mortgage calculator to run the numbers yourself.
A special type of fee to be aware of are discount points. These allow you to buy a lower rate by paying an additional fee up front. Each point costs one percent of the loan amount and lowers your rate by a certain figure, usually one-eighth to one-quarter of a percentage point. Discount points can save you a lot of interest over the life of a loan, but they can also be used to hide the true cost of a loan. An usually low rate that includes two or three points may not be quite the deal it appears to be – check the APR or run the figures through a mortgage calculator to see what you're really paying.
FHA Loans – Missouri
The most common type of Missouri home loans are conforming loans, called that because they conform to the lending guidelines set by Fannie Mae and Freddie Mac. These guidelines cover things like credit score, rate pricing, maximum loan amount, debt-to-income ratio, and the like. Mortgage loans that meet those guidelines are considered fairly safe for investors, which helps keep their rates low and allows them to offer attractive terms. But borrowers with lower scores may have to pay higher rates and make larger down payments than borrowers with good-to-excellent credit.
FHA loan requirements for Missouri borrowers allow lower credit scores than conforming loans do, and permit down payments of as little as 3 percent. Borrowers with lower credit scores and/or making small down payments may also find they can get better rates with FHA loans as well. This makes FHA loans a popular choice for Missouri first-time homebuyers and other borrowers with limited financial resources or weaker credit.
For qualified military veterans and active duty service personnel, VA loans offer the possibility of no down payment mortgages up to generous lending limits, with competitive rates. However, be sure to compare fees charged by different lenders and compare the rates and terms you're offered with what you could get on a conforming or FHA loan to make sure you're getting the best deal.
All three of these mortgage types – conforming, VA and FHA loans – can be used by Missouri borrowers to either purchase a home or refinance an existing mortgage. You can even switch from one type of loan to another when refinancing.
Home Equity Loans
If you're looking for a home improvement loan or need to borrow money for other purposes, you might consider a home equity loan. Home equity loans, as the name implies, are secured by the equity in your home, so you can get a better rate than you generally can with other, unsecured types of loans.
To get a home equity loan you need to have equity; it's a good rule of thumb that you generally want to have at least 20 percent equity remaining after you take out the loan. Many lenders will allow you to go lower, but expect to pay higher rates or fees to do so.
You have two choices when it comes to home equity loans: a regular home equity loan or a home equity line of credit, or HELOC. With the first you simply borrow a sum of money and repay it; with a HELOC, you get a line of credit you can draw against as you wish.
Standard home equity loans usually have fixed rates, while HELOCs are always adjustable-rate loans while the line of credit remains open. You can sometimes convert them to fixed-rates to repay the principle afterward.