Guide to Refinance, Mortgage,
& Home Equity Loans in
Merced, California (CA)

Merced is a very young community; the average age is only 28-years-old. The town has grown rapidly, and half of the residents are renters. Homes are relatively affordable in the area, compared to other California communities. The median home cost is $380,000, but homes have appreciated more than 46% over the past year.

Many of the people looking for home loans in Merced are first-time buyers. Others are interested in refinancing or getting a home equity loan. If you are looking for a home loan in Merced, you have three main types of loans to choose from: fixed rate, variable rate or hybrid.

Fixed Rate Home Loans

Home loan interest rates began to fall rapidly a couple of years ago. Interest rates are now at historically low levels, which make fixed rate loans very attractive. The less interest you have to pay on your home loan, the less your home will cost and the lower your house payments will be.

The advantage of a fixed rate home loan is that you know exactly what your loan will cost you and how much your house payments will be every month. The disadvantage is that, if interest rates continue to fall, you could get stuck with a relative higher interest rate on your loan.

Adjustable Rate Mortgages (ARM)

The interest rate on an adjustable rate mortgage varies over time. The interest rate changes at specific intervals relative to the prime lending rate. If the prime rate increases, so does your interest rate. Every time your interest rate changes, your house payment changes too.

ARMs are popular because home loan interest rates have recently decreased. An ARM is a good option when interest rates are decreasing. The disadvantage is that if interest rates go up instead of down you lose money.

Hybrid Home Loans

Hybrid loans are a combination of an ARM and a fixed rate home loan. A popular hybrid home loan offered by lenders begins as a fixed rate loan and converts later to an ARM.

The initial loan period usually lasts three to five years, although in some cases it can be longer. The interest rate is fixed during this initial period and usually at a very low rate. This allows you to purchase a home now, before home values increases any further, anticipating that your income will increase before the introductory period ends. Your house payment remains stable during this period.

At a predetermined time, your hybrid loan converts to an adjustable rate mortgage for the duration of the loan. Your interest rate and house payments will increase at this time, and will be adjusted at regular intervals after that.

If you are considering getting a home loan in Merced, California, we can help you. Simply fill out the form at the bottom of this page, and an agent will contact you.

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