If you’re ready to buy a home or a new property, you’re probably in the market for a mortgage. A mortgage is a legal document you sign to obtain financing to purchase a home or property, giving the lender the right to take ownership of that property if you can’t pay back the loan. That might sound intimidating, but mortgages are one of the most common types of loans. They’re usually the largest loan a person takes out in their lifetime.
The best 30-year mortgage rates are usually lower than 4%, and the average mortgage rate nationally on a 30-year fixed mortgage is 3.86% as of January 2020. However, mortgage rates have gone as low as 3.31% and as high as 18.5% in the past. Personal mortgage rates are determined by your financial health, monetary policy and economic factors.
The 5 best 30-year mortgage providers of 2020
- Quicken Loans: Best for borrowers with bad credit
- Wells Fargo: Best range of mortgage products
- Chase Mortgage: Best educational tools for first-time home buyers
- Bank of America: Best for online applications
- Citibank Mortgage: Most widely available
|Provider||Rate||APR||Min Down Payment|
|Bank of America||3.750%||3.913%||3%|
What is a 30-year Mortgage?
The most popular are conventional term mortgages with repayment periods of either 15 or 30 years. Paying back a mortgage means paying the principal balance, accrued interest and other possible charges in installments each month until the debt is fully repaid. Simply put, a 30-year mortgage is a home loan that you pay off completely after 30 years. Most 30-year mortgages have a fixed interest rate, so they never change over the lifetime of the loan. However, you can also obtain a 30-year adjustable-rate mortgage (ARM).
30-year vs 15-year
A 15-year mortgage is borrowed and repaid the same way as a 30-year mortgage. The only difference is that a 15-year mortgage is fully repaid in 15 years. There are advantages and disadvantages to each type of loan, so choosing which one is right for you depends on your financial situation. A 15-year mortgage will nearly always have a lower interest rate. However, you can expect much higher monthly payments, as you’ll have to repay the loan faster. Meanwhile, a 30-year mortgage has much lower monthly payments, but often come with a higher interest rate.
30-year Conventional Mortgages vs 30-year Jumbo Mortgages
A 30-year jumbo mortgage is a mortgage you use to finance a property that is too expensive to buy with a conventional mortgage. Jumbo mortgages are much riskier investments for lenders, so they usually have strict underwriting requirements for issuing them. Most people who take out jumbo mortgages have a high annual income and an excellent credit score. Some lenders may require you to show that you have enough of a cash reserve to cover mortgage payments. Jumbo loans are not usually a good idea for regular home buyers.
30-year Fixed Rate Mortgage vs 30-year ARM
Although 30-year fixed rate mortgages are more popular, you can also choose a 30-year adjustable rate mortgage. An ARM will have a low, fixed interest rate for a set number of years. Then, it will switch to an interest rate that adjusts based on economic conditions.
ARMs may be a good idea if you only intend to spend a few years in your new home or intend to pay off your mortgage quickly. It is also possible that you will pay less in interest with an ARM than with a fixed-rate mortgage. However, ARMs are also complex and risky. You can’t predict future interest rates, so you could pay substantially more in the long term.
The Best 30-year Mortgage Lenders
Quicken Loans – Best for borrowers with bad credit
Quicken Loans is the largest online retail mortgage lender in the U.S. Although it is an online lender, Quicken will still conduct a thorough inspection of your financial health before issuing you a loan. You typically need a credit score of at least 620 to qualify for a conventional loan. However, in some cases Quicken can issue certain types of government-backed loans for people with lower credit scores.
Wells Fargo – Best range of mortgage products
Wells Fargo & Company is a multinational financial services firm that provides banking services in addition to loans and investment products. As a “big box” provider, Wells Fargo has one of the biggest selections of mortgage and home refinancing products on the market.
Chase Mortgage – Best educational tools
Chase Mortgage is the home lending branch of JPMorgan Chase & Co., a multinational investment bank. Chase Mortgage has designed its brand to cater to younger customers, so it has a wide selection of online tools to help first-time home buyers make smart mortgage decisions.
Bank of America – Fastest approvals
Another large multinational investment bank, Bank of America offers many of the same products as other extensive financial-services corporations. With the Bank of America Digital Mortgage Experience®, customers can prequalify for an estimated mortgage, shop for a home and apply for financing online, thereby expediting the approval process.
Citibank Mortgage – Most widely available
Citibank is the consumer-facing division of the multinational financial services firm Citigroup. While most other lenders operate regionally — even many of the largest players — Citibank’s mortgages are available throughout the country. The bank also offers discounts to its own customers and looks at alternative credit data to qualify borrowers.
The Final Word
For first-time home buyers, a traditional 30-year fixed rate mortgage from a large reputable provider like Bank of America or Chase is usually a good option. If you have a decent credit history and a large enough down payment, you can expect to make reasonably affordable monthly payments. If your financial picture isn’t ideal, you may consider going with an online lender or another non-traditional option to get your foot in the door. Individuals looking to refinance their homes or make a real estate investment may consider shorter-term mortgages. High-income individuals may also benefit from jumbo loans or other types of mortgage products, like those provided by Wells Fargo.