Residential mortgage loan rates are typically lower than on commercial mortgages and usually have lower down-payment requirements as well.
These loans are most commonly used to purchase single-family homes but may also be used for other types of residences, including condos, townhouses and co-ops, as well as vacation and second homes.
The term also covers loans used to refinance an existing mortgage on a residence, as well as other loans that are secured by the equity in a home, including second mortgages, home equity loans, home equity lines of credit (HELOCs), reverse mortgages and the like.
These loans may be fixed-rate, where the interest rate charged remains the same for the duration of the loan, or adjustable-rate, where the interest rate is periodically reset to reflect current market conditions. The latter are commonly referred to as ARMs, for adjustable-rate mortgages.
Residential mortgage loans may have terms ranging from 10 to 40 years, with 30- and 15-year loans being the most common. That's the length of time needed to pay off the mortgage by making regular payments. The rate at which the loan is paid off and the homeowner builds equity through regular payments is called the amortization schedule.
Fannie Mae, Freddie Mac and more
There are several main categories of residential mortgage loans, depending on the needs and qualifications of the borrower. The most common type of residential mortgages are called conforming loans and are backed by either Fannie Mae or Freddie Mac. They get their name from the fact they must conform to the two guarantors' guidelines in terms of loan limits, credit worthiness, down payment and other requirements.
Residential mortgages that exceed the loan limits set by Fannie Mae and Freddie Mac are known as jumbo mortgages. These limits vary according to local real estate markets. Other mortgages may be deemed nonconforming because they do not meet Fannie Mae and Freddie Mac underwriting guidelines, such as for credit quality or debt-to-income ratio. Not all lenders will deal in these types of loans.
FHA home loans have less strict underwriting requirements than conforming loans do and are generally easier to qualify for. Their loan limits are somewhat lower than on conforming loans, but still adequate for most home purchases.
VA loans are a special type of mortgage for persons with military affiliations that are backed by the federal government and offer very favorable terms. USDA Rural Development loans are another type of government-backed residential mortgage that offer favorable terms to persons of modest means who are buying a home in a non-urban area.
Check for current rates
Mortgage interest rates change daily, so check often for updates. At MortgageLoan.com we update our residential mortgage rates continuously. Refinancing your real estate home loan has never been easier with MortgageLoan.com, the original home of mortgage interest rates on the Internet.
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