If you are looking at buying a new home in this area, the chances are very good that you also want to look at Maryland mortgage rates. Movoto has information that you can use. We have gathered examples of average bank mortgage rates available in today’s credit market for properties in Maryland.
Let’s start with mortgage basics for those of you who may be first-time home buyers. With homes ranging between $200,000-$400,000, most people do not have the full purchase price of a new home available in cash. When a buyer needs to borrow the money to fund the purchase of real property, he can borrow the money from a bank or credit union or building society. Generally, the lender requires the buyer to put some cash on the line in the form of a down payment. The lender loans the balance of the purchase price which the buyer will repay at a specific rate of interest. The lender then secures the loan by putting a legal lien against the property. The lien allows the lender to take possession of the property and sell it in the event that the buyer defaults on the loan or otherwise breaches the loan agreement.
Generally, residential mortgages are available in several types: 30-year fixed rate mortgages, 15-year fixed rate mortgages, and the 5/1 ARM, There are also separate rates available for these types of mortgages on a refinanced basis; however, since they are not relevant in the buyer’s scenario, we will not include examples of average re-finance rates in our discussion.
What Types of Mortgages Are Available?
30-Year Fixed Rate Mortgage: A 30-year fixed rate mortgage means that the borrower makes equal monthly payments based on a fixed interest rate (as opposed to a floating interest rate) over a 30-year period (360 months) at the end of which the mortgage is fully retired. The average interest rate for such mortgages in Maryland declined 7% since last week’s level of 3.70%. Today, the average rate for 30-year fixed rate mortgages in Maryland is 3.63%.
15-Year Fixed Rate Mortgage: A 15-year fixed rate mortgage means that the borrower makes equal payments based on a fixed interest rate (as opposed to a floating interest rate) over a 15-year period (180 months) at the end of which the mortgage is fully retired. The average interest rate for such mortgages in Maryland declined 6% since last week’s level of 2.82%. Today, the average interest rate in Maryland for 15-year fixed loans is 2.76%.
5/1 ARM:Â This is a hybrid mortgage. The first five years of this type of loan consist of 60 equal payments with a fixed interest rate making it similar to a fixed rate mortgage. After the first five years, however, the loan experiences what is known as “a reset period.” The loan does not retire but retains a principal balance that will be paid off in the remaining months of the loan period at an applicable interest rate. In this case, however, the applicable interest rate floats on a margin above a specified index. That interest rate adjusts on a yearly basis to reflect the cost to the lender of borrowing on the current credit market. The average interest rate for 5/1 ARM loans in Maryland remains even with last week’s level of 3.01%.
Adjustable rate mortgages mean the buyer pays lower payments in the earlier years so they are attractive to buyers; however, they potentially carry great risk for the buyer over the long term. Sometimes known as “teaser periods”, adjustable rate mortgages may carry an interest rate in the early years that is substantially lower than the fully indexed rate. When the teaser period is over, however, the pop-up to the fully indexed rate often is substantial. One thing to bear in mind is that while the low teaser rate may make the adjustable mortgage seem like a sweet deal, in effect, the adjustable rate mortgage transfers the loan’s financial risk from the mortgagor to the borrower.
What Are a Few Examples of Mortgage Rates Available by Major Cities in Maryland?
If the property that you want to buy is in one of the following cities or close to one of them, the range of rates shown for that city will apply to your mortgage too. The rates in the examples below are based on a mortgage of $300,000 with a 20% down payment and no points. Mortgage interest rates available from specific lenders may differ from those described below.
Annapolis, Baltimore, and Rockville, Maryland – Mortgage rates for a 30-year fixed mortgage range from 3.50% APR – 4.76% APR. Compare this range to the national average rate of 3.88% as determined by Bankrate.com and the site average of 3.63%. Mortgage rates for a 15-year fixed mortgage range from 2.76% APR – 3.60% APR. Compare this range to the national average rate of 3.15% as determined by Bankrate.com and the site average of 2.76%. Mortgage rates for a 5/1 ARM mortgage range from 2.79% APR – 3.74% APR. Compare this range to the national average rate of 3.21% as determined by Bankrate.com and the site average of 3.10%.
What Are Predictions for Mortgage Interest Rates in 2016?
Mortgage interest rates have already made history in 2016. The Bank of Japan and Europe have both entered negative interest rate territory which, in turn, has driven U.S. mortgage rates and treasury bond rates lower. Rates have been falling for the last five weeks. On February 4, some experts were predicting a sixth week of falling mortgage interest rates which would be history making in itself. That has certainly held true in Maryland.
And it’s not just mortgage interest rates that are uncertain: everyone is fixated on how low the price for crude oil will drop. Add to that the doubts that the Fed will raise interest rates before the second half of the year and we have a recipe for economic uncertainty. All in all, the economic environment seems ripe for investors to rush toward safe investments like bonds which will cause interest rates to drop even further.
2 Point Highlight
Some experts are predicting a sixth week of falling mortgage interest rates which would be history making in itself.
