Since the housing market crash of 2008, home mortgage rates have been lower than they have been in years. California is no exception to this, especially since California is known for being the epicenter of the housing crash. Now may be the best time to get a low rate on a new mortgage in California. Mortgage lenders are offering low rates on mortgages in California in order to attract new buyers. Any time interest rates are lowered, it is an attempt to attract more buyers in the housing market. On top of their being record number of foreclosures and low housing prices, California mortgage rates are pretty low as well.
In fact, the average California mortgage rate for a fixed rate mortgage is around 4%. There are countless mortgage lenders all competing for a home buyer’s business. In order to be competitive, mortgage lenders in California must provide low interest rates. For example, Nationwide Direct is offering mortgage rates around 4.31% on a 30 year fixed mortgages. There are a number of other mortgage lenders online that are offering mortgage rates in California around 4% as well. AmeriSave is another mortgage lender that offers 3.875% interest on mortgages in California.
30 year fixed mortgages in California are not the only type of mortgage that is offering low rates by a number of lenders. In fact, many mortgage lenders are offering around 4% interest on 15 year fixed mortgages as well. However, low rates on mortgages in California get even lower with other types of mortgages. For example, adjustable rate mortgages and variable rate mortgages in California will be around 2%. A 5/1 adjustable rate mortgage in California that has a rate of 2% is extremely low. However, homeowners should be fully aware of how adjustable rate mortgages and variable rate mortgages work.
Even though adjustable and variable rate mortgages offer the lowest rates possible in California, they have a low rate for only a certain period of time. For example, a 5/1 adjustable rate mortgage will have a rate of around 2% for the first 5 years of the mortgage. After the fixed rate period is over, the interest rate will be adjusted once a year on the mortgage. In other words, a 5/1 adjustable rate mortgage means the mortgage has a 5 year fixed rate, and an adjustable rate every year after the first 5 years.
A lot of homeowners chose adjustable and variable rate mortgages before the housing collapse of 2008. Economists say that many homeowners didn’t fully understand how adjustable and variable rate mortgages actually worked, which caused problems to the homeowner once the interest rate on the mortgage went up. Regardless of adjustable and variable rate mortgages in California, fixed rate mortgages are still considered low. Refinancing a mortgage in California is also something that many homeowners are taking advantage of because current interest rates on mortgages are low. No one knows for sure how long mortgage rates will remain as low as they are now, which is why it’s important to lock in a rate before rates go back up.
On top of the fact that current mortgage rates in California are low, home shoppers can also take advantage of the tools made available online that help the home shopper obtain a low rate on a mortgage. By doing some research and comparing rates online between major lenders, home shoppers can effectively choose a low rate. First time home buyers are advised to take advantage of the current low interest rates on mortgage loans in California as well. Special programs like FHA loans and VA loans should also be used because the housing market is considered a buyer’s market.