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Mortgage prices have skyrocketed over the past few years. Read on to find out what mortgage terms online users are most interested in.
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House prices have skyrocketed nearly 29% over the past three years, according to the Federal Reserve Bank of St. Louis. That rapid rise has left potential home buyers desperately wondering when housing costs will cool down. And to help them find the answers, many of them are unsurprisingly searching Google for the answers.
A quick look at the most popular mortgage loan topics on Google over the past three months shows that potential home buyers are interested in figuring out how to calculate a mortgage payment, what loans are available, and what the current mortgage rates are.
If you’re looking to apply for a mortgage loan soon, or you’re just curious about what online users are searching for, let’s take a closer look at the top mortgage loan terms on Google right now.
1. Mortgage calculator
According to Google, the top mortgage term searched by online users was for a mortgage calculator. These calculators are great at helping buyers figure out how much their monthly mortgage payment will be based on specifics like the price of the home, the interest rate, and the down payment.
Using a calculator can help you compare different loan scenarios, which is helpful before you contact a mortgage lender so you have an idea of how much a hypothetical loan will cost.
The Ascent has a great mortgage calculator if you need one, which allows you to include home insurance, property taxes, and homeowners association fees to better estimate your monthly housing costs.
2. Mortgage loan
The next term Google users searched for under the mortgage loan theme was the general mortgage loan topic. A mortgage is a type of loan you take out when buying a house, which is secured by the home you’re buying.
Most mortgage loans are either for 15 years or 30 years, and there are a handful of different types of mortgages, including a conventional loan, an FHA (Federal Housing Administration) loan, a U.S. Department of Agriculture (USDA) loan, and a Veterans Administration (VA) loan.
Most loans, around 70%, fall into the conventional loan category, meaning any federal mortgage assistance does not back them. Each type of loan has benefits and drawbacks, so it may be helpful to find out which kind of loan suits you best by reading our beginner’s guide to mortgages.
3. Mortgage payment
Google users really wanted to know about mortgage payments as well. Your monthly mortgage payment will be based on the principal amount of your loan, how long your mortgage term is, what your interest rate is, and other fees, including your HOA fees and your homeowners insurance premiums.
For example, if you buy a home for $350,000 with a 20% down payment and a 7% interest rate, then your monthly payment for principal and interest would be $1,862. But you’ll likely pay more than this because most people also roll their property taxes, homeowners insurance, and HOA fees into the payment.
It’s also good to keep in mind that at the very beginning of your loan, more of your payment will go to the interest owed than the principal amount. As you continue making payments, you’ll eventually pay more towards your principal than the interest. This payment schedule, known as an amortization schedule, will be provided by your lender when you get a mortgage.
4. Mortgage interest rate
Finally, one of the most-Googled mortgage terms was for interest rates. The mortgage rate determines the interest you pay to your lender, and they’ve been on the rise over the past few years, making housing more expensive.
Mortgage rates have skyrocketed over the past several years as the Federal Reserve has pushed the federal funds rate higher to fight inflation. The average interest rate for a 30-year mortgage rate was just 3% three years ago and now it’s 6.75%. To show you how much a few percentage points matter, consider that a $350,000 home, with 20% down, would cost $635 more each month with a 6.75% interest rate compared to a 3% rate.
While you can’t change a bank’s lending rates, there are a couple of things you can do to improve your chances of getting a better rate.
First, keep your debt-to-income ratio low. Lenders typically want to see your monthly total debt payments be below 35% of your income, according to Wells Fargo. Paying your debts down will not only lower your debt-to-income, but it could also help raise your credit score, which could improve your interest rate.
Second, shop around for the best lender. Just as online users are researching mortgage terms right now, make sure to do your own research to find the best mortgage lender for you, especially if it’s your first time buying a house.
One lender may offer you a better rate or even lower fees, and some may even offer free refinancing in the future if rates drop. Comparing lenders can help save you money, so spending some time researching upfront could save you money over the long term.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
