• What is a Mortgage?
• Why Understanding Mortgage Rates Matters
• Choosing the Right Mortgage
• Support for First-Time Homebuyers
• What is Fannie Mae?
• How Fannie Mae Works
• Buying vs. Renting: A Financial Comparison
• Take the Next Step with Advia

What is a Mortgage?

Imagine you want to buy a house, but you don't have enough money to pay for it all at once. A mortgage is a loan that helps you buy a house when you don't have enough money to pay for it up front. You borrow money from a lender, such as a credit union or a bank, and repay it over time in monthly installments. The house serves as collateral, ensuring the lender gets paid back.

Buying a home is an exciting journey and while it can sometimes seem daunting, it can be made much smoother with the right knowledge and preparation. By understanding how to secure the best mortgage rate and choosing the loan that best fits your needs, you can make the process both positive and rewarding whether you're a first-time homebuyer or a seasoned homeowner.

Advia and our partner Mortgage Center are dedicated to providing the best mortgage rates possible for our members and educational information they can count on.

Keri Marentette, an Account Executive at Mortgage Center, says “Buying your first home can feel overwhelming but we’re here to help make it easier. We want to guide you through the process so it’s as simple as possible.”

Why Understanding Mortgage Rates Matters

Mortgage rates significantly impact the overall cost of your home loan. Lower rates mean lower monthly payments and less money spent over the life of the loan. Comparing rates from different lenders and keeping an eye on the national average can help you make an informed decision and save money.

For instance, let’s say you’re taking out a $300,000 30-year mortgage.

Here’s how different interest rates could affect your payments. Please note that these figures are for illustrative purposes only and may not reflect the rate you qualify for:

• At 6.44% (national average as of August 27, 2024): Your monthly payment would be around $1,892.29
• At 6.25% (Advia): Your monthly payment would be around $1,844.10
• At 7.10% (Financial Institution #2): Your monthly payment would be around $2,019.15

By choosing Advia’s rate of 6.25%, you’d save $48.19 per month and $16,246.09 over the life of the loan compared to the national average.

Choosing Advia’s rate over the 7.10% rate from Financial Institution #2 would save you $175.05 per month and $64,706.13 over 30 years.

This example shows how even small differences in interest rates can lead to substantial savings. It’s worth comparing rates from different lenders to find the best deal for your mortgage.

At Advia, we take pride in offering competitive rates in partnership with Mortgage Center. Be sure to explore how we can help you with your home financing needs.

Choosing the Right Mortgage

When choosing a home loan, you have several options. Each type of loan offers different terms, interest rates, and benefits. Here’s a quick overview of some common home loan types:

• Fixed-Rate Mortgages: With a fixed-rate mortgage, your interest rate remains constant throughout the loan term, which can range from 5 to 40 years. The most popular terms are 15 and 30 years, providing predictable monthly payments.
• Adjustable-Rate Mortgages (ARMs): ARMs feature an interest rate that adjusts after an initial fixed period, which can be 5, 7, or 10 years. These are typically 30-year loans, offering lower initial rates that can change over time.
• Government-Backed Mortgages: These are designed to help first-time homebuyers and are insured by government agencies like the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), often with lower down payment requirements.

Support for First-Time Homebuyers

If you’re ready to buy your first home, congratulations! Advia and Mortgage Center are here to support you and make the homebuying process as smooth as possible. Again, we know it can feel overwhelming, but it doesn’t have to be complicated.

As you consider your options, Marentette suggests looking into the various programs we've discussed above. There’s also the Federal National Mortgage Association (Fannie Mae).

“Fannie Mae offers valuable resources and flexible options that can make the homebuying process smoother and more accessible for first-time buyers ,” says Marentette.

What is Fannie Mae?

Fannie Mae is a government-sponsored enterprise that helps make home loans more accessible by purchasing mortgages from lenders and setting standards for loan quality. This approach supports borrowers, especially first-time homebuyers and those with moderate incomes, by offering lower payment options and flexible credit requirements.

How Fannie Mae Works:

Fannie Mae doesn’t lend money directly to homebuyers. Instead, it operates in the secondary mortgage market, where it purchases loans that lenders have already made to borrowers. Here’s a simple breakdown of the process:

1. Lenders make loans: When you apply for a mortgage, a lender assesses your financial situation and, if approved, issues you a loan.
2. Fannie Mae buys loans: Fannie Mae purchases these loans from lenders, providing them with the funds to make more loans to other borrowers.
3. Loan packaging and reselling: After purchasing these mortgages, Fannie Mae bundles them into mortgage-backed securities (MBS) and sells them to investors. This process helps ensure there is a steady flow of money in the mortgage market, which keeps interest rates relatively stable and available to a wider range of borrowers.

Buying vs. Renting: A Financial Comparison

If you’re feeling torn between buying a home or renting, we understand – it’s a big decision! That’s why it’s important to understand the financial differences. Buying a home allows you to build equity and potentially benefit from property appreciation and tax deductions. Renting, however, offers flexibility and less responsibility but doesn't build equity or provide the financial benefits of homeownership.

“Buying a home can be a smart investment if you plan to stay in one place for a while and want to build equity,” Marentette says. “On the other hand, renting offers more flexibility and less responsibility, which might be better if you’re not ready to commit to homeownership. Understanding these differences can help you choose what’s best for your needs and long-term goals.”

Take the Next Step with Advia

Are you ready for your next (or maybe your first!) home? Advia takes pride in providing real advantages and financial expertise for real people like you! Alongside our partner Mortgage Center, we offer competitive mortgage rates and expert guidance to help you navigate the homebuying process.

Whether you're buying, building, or refinancing, we have options to suit your needs. Plus, take advantage of our special mortgage rate discounts, available now until October 31, 2024! For details and requirements, be sure to scroll down the page and read the full disclosure and terms.