3 underrated mortgage products to consider

The 30-year mortgage is easily the most popular and talked-about mortgage product out there. After all, in January 2021, 30-year loans accounted for a whopping three-quarters of all mortgage originations in the country. 

But make no mistake: They’re not your only option when buying or refinancing a home. In fact, they could actually cost you more (often significantly more) if used incorrectly.

Are you currently thinking about buying a home or refinancing your existing mortgage?  Want to make sure you’re getting the best deal and making the right choice for your finances? Then put these three underrated mortgage products on your radar:

1. USDA loans

Though USDA loans are technically reserved for homes in “rural” areas, you’d be surprised at how much of America actually qualifies for these mortgages. (It’s reportedly around 97% of all U.S. landmass!)

If you can find a home in a USDA-eligible area, you’ll definitely want to give these loans a look. For one, there’s no down payment required. Considering other loans require anywhere from 3% to 10% down at minimum, this can mean serious savings from the start.

USDA loans also come with low interest rates, and their mortgage insurance costs — called guarantee fees in this case — are lower than other options as well. When you put it all together, it means lower costs and a significantly easier path toward homeownership. 

2. 15-year mortgages

The 30-year mortgage might be the most popular, but don’t discount its shorter-term sister, the 15-year loan. These mortgages come with lower interest rates, a quicker payoff timeline and the opportunity to build equity much faster than 30-year loans.

And while the monthly payments are a bit higher, they’re well worth it if you have the budget. At today’s average rates, you’d save more than $60,000 in interest by choosing a 15-year mortgage over a 30-year one. (And who couldn’t use an extra $60,000 in the bank?)

3. Streamline refinances (if you have an FHA or VA loan)

Both FHA and VA loans come with a streamline refinance option, which essentially means a fast-tracked path to a new mortgage loan. You often won’t need a credit check, home appraisal or much paperwork, and you can close on your loan in just a couple of weeks. 

They usually come with lower closing costs, too, making them a great way to save both time and money. 

It doesn’t stop there

There are plenty of other mortgage options out there, too, so be sure to talk to a mortgage broker or loan officer for guidance. They can point you toward a loan that fits your specific needs and budget, as well as your long-term goals as a homeowner. 

3d rendering of a row of luxury townhouses along a street

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