Buying a home for the first time can be a terrifying experience, especially if you start the process without having a good understanding of the types of mortgage loans available and an understanding of the mortgage rates that are available.

When you start your search for a home you should first figure out how much house you can afford and what current mortgage rates are going for. Likewise if you\’re refinancing an existing mortgage loan you should know where current refinance rates are before you spend the time and money refinancing.

If you\’re buying a home the types of mortgages rates available include conforming mortgage rates, super conforming mortgage rates and jumbo mortgage rates. Each mortgage has a specific purpose and is tied to the total loan amount.

There are variations of each type of mortgage available and different terms. There are loans available for only 1 year or up to 40 years. The most common is a 30 year fixed mortgage.

Conforming mortgage rates are rates on mortgages that meet the criteria set out by the Federal Housing Finance Agency (FHFA). There are limits set for each county of the United States. There are higher mortgage loan limits for designated high-cost areas, like on the East Coast and West Cost and in large cities like New York, Los Angeles, Houston and other cities.

Mortgages that “conform” to the standards set out by the Federal Housing Finance Agency can be purchased by Freddie Mac and Fannie Mae. Basically it is government backing. This process guarantees banks are able to resell mortgage loans that have been made and are willing to make loans. As a result, conforming mortgage rates are lower than jumbo mortgage rates.

There is a variation of conforming mortgages that are for expensive housing areas. Super conforming mortgages are mortgages that have higher mortgage loan amounts but still “conform” to the standards set by the Federal Housing Finance Agency. Super conforming mortgage rates are always higher than conforming mortgage rates because the loan amount is larger.

Jumbo mortgage rates are rates for mortgage loans that have a dollar amount higher than conforming and super conforming loan amounts set out by the FHFA. Jumbo mortgage rates are usually 0.75 basis points to 1.00 basis points higher than conforming mortgage rates, or 0.75 percent to 1.00 percent. The reason being is there are no guarantee banks and credit unions can sell these mortgages after they make the loans.

All these types of mortgages are available in fixed rate mortgages and adjustable rate mortgages. The most common type of mortgage are fixed rate mortgages.

The mortgage interest rate and the monthly mortgage payment stay the same for the entire life of the mortgage loan. This makes fixed rate mortgages the most stable and predictable for mortgagees.

Adjustable mortgages have a fixed mortgage rate for a certain number of years and then the mortgage rate adjusts every year after the initial period. There are usually yearly caps and life time caps on how much the mortgage interest rate and fluctuate. Your monthly mortgage payment will be lower at first but can rise when mortgage rates rise.

Interest only mortgages are mortgages that the borrower pays only the interest on the principal balance or a set period of time. After the initial period the mortgagee pays both interest and principal. Interest only (IO) mortgages were popular during the housing boom.

FHA mortgage rates are rates on mortgages that borrowers must meet certain requirements established by FHA to qualify for a mortgage insured by the FHA. FHA mortgage rates in are usually lower than conforming mortgage rates because mortgage lenders bear less risk because FHA will pay the lender if a homeowner defaults on his or her mortgage loan.

You should also know what current mortgage rates are because the higher the rate the higher your payment and the less house you can afford. Mortgage loan rates, savings account rates and CD rates have been so low recently but are expected to go higher soon.

Author Bio: Search and compare mortgage rates and refinance rates by using our interest rate tables. You can also find the best CD rates and savings account rates.

Category: Real Estate
Keywords: mortgage rates, refinance rates, cd rates, savings account rates, jumbo, conforming