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Rhode Island is the smallest state in the country. With a population of just over 1 million, the state is home to delicious cuisine, stunning beaches, and magical lighthouses. The state boasts incredible mansions, vast farmlands, and stunning gardens. The capital and largest city is Providence, and the 2nd largest city is Warwick. Many people in the state own homes, and numerous other people in Rhode Island are looking to purchase a home. Zillow states that the median home value in the state of Rhode Island stands at $244,900. Home values have risen 5.6% within the past year, and experts believe they will continue to rise over the next year. Even with the rising home prices, many people in the state of Rhode Island will be seeking a mortgage to finance a new home.

Rhode Island Mortgage Rates states that the average interest rate for a 30-year fixed rate mortgage in Rhode Island stands at 4.23%. For a 15-year fixed mortgage, the average interest rate is 3.36%. For an adjustable rate mortgage, the rate is 3.37% for a 5/1 ARM. If you would like to refinance your mortgage, the rate is 4.27% for 30 years and 3.41% for 15 years. The average mortgage rate in Providence for a 30 year mortgage is 4.41%.

Rhode Island Mortgage Laws

Mortgage lenders in Rhode Island are required to follow certain guidelines when it comes to mortgage loans. Lenders are required to operate in a fair and honest manner. They cannot discriminate against you because of your race, religion, gender, or color. Lenders must provide you with a Truth in Lending Disclosure within 3 days after the completion of your loan application. This document should include the annual percentage rate of the loan, as well as your finance charge, the amount financed, and the total number of payments. Lenders must also present you with a Good Faith Estimate, which will explain your closing costs and terms regarding your loan.

Rhode Island Mortgage Application

The rates you are offered will largely depend on your credit score, so it is advisable that you check your credit before you apply for a loan. Search online and compare lenders to see which lender will offer you the best rate available. You can then get pre-approved for a loan, so you will know how much you can afford. When you complete the application, you will be asked personal information, such as your income and employment status. During the application process, the lender might want you to submit bank statements, pay stubs, W2 forms, and income tax statements. If you are approved for the loan, an inspection and appraisal will be required. The length of time to complete the loan varies among lenders, but the average time is 30 to 45 days. When everything is set, you will set up a time to close on the loan.

Kinds of Mortgages

One of the first things that you need to decide is whether you want a fixed mortgage or an adjustable rate mortgage. A fixed rate mortgage offers predictability because your rate will remain unchanged, so your monthly payment amount will stay the same. If you get a good rate and plan to stay in your home for a long time, this is a good option. An adjustable rate mortgage will vary. You will start out with an initial period. After that period is complete, your rate could go up or down, as will your payment amount. With this mortgage, the initial payment will be lower, so you can qualify for a higher amount; however, when the period ends, your rate could increase, so you need to make sure you can afford the higher payments.

You will also have the option of an FHA loan, VA loan, USDA loan, or a conventional loan. A conventional loan is not insured by the federal government. In order to be eligible for a VA loan, you must be in the military or retired from the military. No down payment is required. To qualify for a FHA loan, you can have less than perfect payment, and a large down payment is not required. The USDA loan is offered to people with lower incomes.