Mortgage rates have hit their lowest level in weeks – and here are even more ways to save on your mortgage

The latest mortgage rates

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Mortgage rates are falling. In June, 30-year fixed rates reached 6%, but this month we have seen them fall. Indeed, 30-year fixed-rate mortgages fell to 5.60%, the lowest in weeks, according to the latest Bankrate data from July 28. Meanwhile, the national average for 15-year fixed rate mortgages has fallen to 4.89%. (See the lowest mortgage rates you can get now here).

How save on a mortgage

A great thing to do is to shorten the term of your loan, if you can, as 15-year mortgage rates are significantly lower than 30-year mortgage rates. Something else to consider? Adjustable Rate Mortgages (ARMs) — but only if it suits your long-term plans. Latest Bankrate data shows average rates on 5/1 ARMS (rates are fixed for five years and then adjusted) at 4.18%, significantly lower at the start than 15 and 30 year fixed rate mortgages . But, there’s a caveat: ARMs tend to make more sense for short-term homeowners who only plan to be in the same home for 5-7 years. As ARM rates become 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,” said economic analyst Jacob Channel. principal of LendingTree, at MarketWatch Picks.

Whether you opt for a 15-year fixed, a 30-year fixed or an ARM, experts recommend shopping around, getting quotes from 3-5 lenders and determining your credit score (improve it if necessary) and your debt to income ratio. ratio (DTI), which can help you determine the 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. (See the lowest mortgage rates you can get now here).

There are also other ways to deflate your mortgage rate. Rebate points, which are fees paid to reduce an interest rate, can make a difference if you can afford them. Typically, one point lowers 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.

Any advice, recommendations, or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our business partners.

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