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UNDERSTAND CONVENTIONAL FIXED-RATE LOANS
Fixed-Rate Loans in California
WHAT IS A FIXED-RATE LOAN?
A conventional fixed-rate loan has the same mortgage payments over the life of the loan. A conventional loan typically requires a slightly higher down payment and can be harder to qualify for than an FHA loan. On the other hand, rates may be lower as well as closing costs. Typical fixed-rate loans are for 30, 20, or 15 years.
With a conventional fixed-rate loan, monthly mortgage insurance is usually less than other loans and may even be waived with a minimum 20% down payment.
What are the Loan Rates for a Fixed-Rate Loan?
With a fixed-rate home loan, the faster you pay off the loan, the better interest rate you may be able to get. In general, the longer a lender agrees to keep the interest rate “fixed,” the greater the risk to the lender. Therefore, the interest rate on a 15-year fixed-rate loan is slightly lower than on a 20 or a 30-year fixed-rate loan.
Of course, monthly payments for shorter-term loans are higher than a 30-year fixed-rate loan. You will need to take into consideration how much you’ll be able to pay each month when selecting the length of your loan.
What are the Requirements for Obtaining a Conventional Fixed-Rate Loan?
Buy a home with as little as 5% down (primary home)
Refinance up to 95% of your primary home’s value
Monthly payments remain the same for the entire home loan term
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