We get the latest mortgage rates every day from a network of mortgage lenders who offer loans for buying a house and refinancing. Whether you are getting a mortgage to buy a house or to refinance, always shop around and compare rates and terms. Since rates can vary, always shop around when buying a house or refinancing your mortgage.
Not every lender offers every loan type, and rates can vary greatly depending on which type of loan you select. There are several different types of mortgages out there, and these typically vary based on how long your loan is for, how long it is for years, and if your interest rates are fixed or adjustable. Two of the most popular mortgage terms for fixed-rate loans are 15-year and 30-year mortgages. With a fixed-rate loan, your interest rate does not vary, but your calculations are different for a variable-rate mortgage, since your interest rate may change during your time on the loan.
For example, a 5/1 ARM (Adjustable Rate Mortgage) will have a fixed rate for the first five years of the loan, and then it changes each year thereafter. For instance, if you had a fixed-rate mortgage at 4.5% and prevailing rates shot up to 6% over the following week, year, or decade, your rate was locked, so you never had to worry about paying more. While your total monthly payments may still fluctuate depending on real estate taxes or other factors that change during your mortgage, the fixed rate locks in what you will pay in interest for the duration of the loan. In the early stages of your payoff, a greater percentage of your payments will be for the interest portion of a fixed 30-year loan than for its principal.
Depending on what kind of mortgage you take out, you might have to put up to 20% for the down payment. If you can, consider increasing your down payment to see if that gets you a lower interest rate on your home loan. You should consider refinancing your home loan if the current interest rate on the mortgage is higher than the interest rate on todays mortgage by more than one percentage point.
The current interest rate for adjustable-rate mortgages for 5 years is 2.64 percent, paid at the cost of 0.2 points, an increase of 0.05 percentage points. There is generally a spread of around 1.8 percentage points between 10-year Treasury rates and average mortgage rates, suggesting that mortgage rates may move higher.
Interest rates, however, do not directly influence longer-term rates, which includes financial products such as 30-year fixed-rate mortgages; longer-term rates tend to move in lockstep with 10-year Treasury yields. These rate averages will give you a good sense of how your mortgages length and what kind of loan you are getting will impact interest rates. Your mortgages interest rate affects how much you will pay each month, and how much you will pay in total interest costs over the lifetime of your loan.
National rates are not the only thing that could influence your mortgage interest rate — personal information, such as your credit history, also could impact what you pay for a loan. Mortgage and refinance rates differ widely depending on the unique situation of every borrower. While lower mortgage and refinance rates are promising signs for more affordable loans, keep in mind they are never a guarantee of what rates your lender will give you.
The best mortgage lender for you will be one who is able to get you the lowest rates and terms that you need. There are hundreds of mortgage lenders out there, each with potentially more than a dozen products, ranging from fixed rates to adjustable rates, from 10-year terms to 30-year terms. Some of the most common mortgage loan products are traditional, FHA, USDA, and VA loans. Some loan products, such as USDA loans, generally have lower rates than the conventional mortgage options for qualified borrowers.
Government-backed loans may offer lower mortgage rates, particularly if your credit score is lower, but those same loans may come with potentially higher fees that increase your APR. Historically, borrowers with higher credit scores are less likely to default on their mortgages, and thus qualify for lower rates. Your local bank or credit union likely writes mortgages at rates closer to the national median today. Credit scores, length of the loan, interest rate type (fixed or adjustable), size of the down payment, the home location, and size of the loan all will impact mortgage rates offered to individual homebuyers.
Adjustable-rate loans are best suited to borrowers who anticipate moving out of the house before the first rate adjustment, or can afford higher payments in the future. Because adjustable-rate mortgages (orARMs) typically carry lower rates upfront, those planning on selling within a couple of years (or before exposing themselves to higher rates) may prefer this option. Adjustable rates have a fixed period at the beginning (five or seven years is common), but they will fluctuate after that time, depending on current market rates, over the rest of the loan.
The annual percentage rate (APR) helps you compare the true value of two loans. Compare fees The interest rate on a home loan is not the only factor in your homes lending costs. Last year, Freddie Mac reported that buyers who received offers from five different lenders had an average 0.17-percentage-point lower interest rates than those who did not receive multiple quotes.
Cash-out refinances are more risky for mortgage lenders, which is why they are typically priced higher than both new-home purchases and rates-based refinancings. Lenders typically require mortgage insurance for loans that have a down payment of less than 20% (in home purchases) or a net worth of less than 20% (in refinancing).
Direct lenders typically keep much of the mortgage process in-house, from application through processing, and many assign a single processor, so that you can ask them questions about rates, terms, fees, etc., and monitor your loans progress at any time. In this scenario, a lender may increase rates to discourage new business and allow loan officers time to process loans that are currently in the pipeline. For instance, a borrower with a good credit score and 20% down payment taking out a $200,000, 30-year fixed-rate loan at 4.25% rather than 4.75% would save nearly $60 per month — a savings of $3,500 over the first five years.