California real estate is among the most expensive in the country, so getting the most competitive price is imperative for homebuyers looking to save money where they can.

One of the best ways to get the lowest possible mortgage rate is to do a comparison shop by comparing interest rates from multiple lenders.

What are the current mortgage rates in California?

On Wednesday, July 20, 2022, according to Bankrate data, average mortgage rates in California were as follows:

• 30 years fixed: 5.80%
• 15 years fixed: 5.03%
• 5/1 ARM: 3.94%

The 30- and 15-year rates are above the national averages published by Freddie Mac, while the 5/1 ARM is just below. Here are the national median home loan rates for the week ended July 14: The 30-year fixed-rate mortgage was 5.51%; the 15-year fixed-rate mortgage was 4.67%; and the 5/1 Adjustable Rate Mortgage (ARM) was 4.35%.

What Type of Mortgage is Right for You?

Finding the right mortgage is important for those looking to maximize their money to get the highest return. Some borrowers might think the best way to save money is to pay off their mortgage faster — by opting for a shorter loan term with higher monthly payments — but that’s not always the case.

If you can secure a low mortgage rate, it might be better to get a 30-year loan and invest the extra money you save on monthly payments into something that has a higher return on investment, like credit card debt or other high-interest loans .

Related: The best mortgage lenders

Types of Mortgages

Choosing the right mortgage depends on your financial situation and goals. A low down payment mortgage may make sense for some, and a jumbo mortgage for others.

But there are different types of mortgages that tick a variety of boxes, here are a few to consider:

Traditional mortgages

Traditional mortgages are loans that meet Fannie Mae and Freddie Mac underwriting standards. These are the most common non-government backed mortgages.

Traditional mortgages typically have stricter eligibility requirements than government-backed loans, but they also offer benefits such as: B. Relaxed home inspection standards and the ability to drop private mortgage insurance (PMI) after reaching 20% ​​equity (without refinancing).

FHA loan

Federal Housing Administration (FHA) loans have lower interest rates and only require a 3.5% down payment.

The downside to FHA loans is that if you pay back less than 20%, you have to pay a mortgage insurance premium (MIP) that cannot be removed unless you refinance into a traditional mortgage.

VA loan

Department of Veterans Affairs (VA) loans are intended only for military members and active-duty veterans and their spouses. VA loans are advantageous because there are no down payment requirements, the loan requirements are not as stringent, and your closing costs can be included in the loan.

USDA Mortgages

United States Department of Agriculture (USDA) loans are for homebuyers in rural and designated USDA areas. Similar to VA loans, USDA loans have no down payment requirements and the loan requirements are more relaxed than traditional mortgages.

What you should know about buying a home in California

Right now, California property taxes are among the lowest in the country. According to the Tax Foundation, California property taxes were the fourteenth lowest in the US, with state and local property taxes totaling $2,411 per capita.

Help for first-time home buyers

Buyers who need help with a down payment or closing costs can take advantage of California’s many assistance programs. Some of these programs are designed to help first-time home buyers (those who haven’t owned a home in three years) and low- and middle-income buyers.

The California Housing Finance Agency, or CalHFA, has several programs designed to help buyers acquire homes. Some of these programs include grants, interest-free deferred loans, and financial assistance for the construction of secondary housing units (ADUs).

Related: Best mortgage lenders for first time home buyers

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