Mortgage rates have fallen. What you need to know to save even more on your mortgage
For about a week now, the average rate on a 30-year fixed mortgage has been above 6%, according to data from Bankrate – but the latest figures show rates have fallen below 6%. Indeed, data released by Bankrate on Friday shows that the average rate for a 30-year fixed-rate mortgage is 5.88%, and for a 15-year fixed-rate mortgage it has fallen to 5, 10%. You can see the lowest mortgage rates you can get right now here.
Of course, you might be complaining about not getting a 3% rate when they were available, so we’re sharing some tips on what you can do to save on a mortgage now.
First, if you can afford a 15-year mortgage, rates are lower on those. Another thing to consider is an adjustable rate mortgage (ARM) – but only if that makes sense to you. The latest Bankrate data shows that average rates on 5/1 ARMS (rates are fixed for five years and then adjusted) are 4.29%, significantly lower at the start than 15- and 30-year fixed rate mortgages. That said, ARMs tend to make more sense for short-term homeowners who only plan to stay in the same home for 5-7 years. One caveat, however, is that because rates are becoming variable, “ARMs can be risky and, in the long run, they may end up costing more than a fixed mortgage with a higher initial rate,” he said. said Jacob Channel, senior economic analyst at LendingTree, recently. says MarketWatch Picks.
No matter what type of loan you get, experts advise getting quotes from 3-5 lenders and determining some important numbers, like your credit score (improve it if necessary) and debt-to-income ratio ( DTI), which can help you. determine what rate you can expect to pay. To calculate your DTI, divide your monthly debt payments (mortgage, credit card payments, car, student or personal loans, child support) by your gross monthly income. If the number you come out with is 36% or less, your chances of qualifying for a mortgage, and at a better rate, are better than if you come out with a higher number like DTI. You can see the lowest mortgage rates you can get right now here.
If you’re still looking for ways to lower an interest rate, buying discount points, which are fees paid to lower an interest rate, can help. in general, one point approximately decreases the interest rate by 0.25%, although this may vary. “When you pay cashback points, you give the lender a portion of the interest payments up front in exchange for paying less interest each month,” Holden Lewis, real estate and mortgage expert at Nerdwallet, recently told MarketWatch Picks. But note that there may be limits to the number of discount points you can buy, and buying points may not make sense, especially if you don’t plan on staying in the house for long.