The average 30-year fixed mortgage rate hit its highest level since 2009 this week, according to Freddie Mac, hitting 5.27%.
announced that it had voted in favor of raising the federal funds rate by 0.5% and that it would begin to reduce its balance sheet in June. As the central bank strives to control inflation, mortgage rates are likely to remain high.
If you’re considering buying a home, it’s more important than ever to shop around with multiple lenders and consider all of the different mortgage options available to you. Once you have a good idea of what lenders are offering and what you qualify for, you can more easily compare your options and choose the best one for you.
Mortgage rates today
Mortgage refinance rates today
Use our free mortgage calculator to see the impact of today’s mortgage rates on your monthly payments. By plugging in different rates and terms, you’ll also understand how much you’ll pay over the life of your mortgage.
Your estimated monthly payment
- pay one 25% a higher down payment would save you $8,916.08 on interest charges
- Lower the interest rate by 1% would save you $51,562.03
- Pay an extra fee $500 each month would reduce the term of the loan by 146 month
Click “More Details” for tips on how to save money on your long-term mortgage.
What is a fixed rate mortgage?
When you get a mortgage, you’ll need to decide what type of rate you want: fixed or adjustable.
A fixed rate mortgage fixes your rate for the life of your mortgage. This means that even if market rates go up or down, yours will stay the same. Fixed rate mortgages can be beneficial for borrowers looking for stability; Although you can miss out if rates go down, you don’t have to worry about your monthly payment increasing if rates go up.
A adjustable rate mortgage keeps your rate the same for a pre-determined amount of time, then changes it periodically. A 5/1 ARM locks your rate for the first five years, then the rate fluctuates once a year. This is a riskier approach because you risk your rate going up later.
Adjustable rates can be interesting because they are often lower than fixed rates over 30 years. If you plan to sell your home or refinance your mortgage before the fixed introductory ARM period ends, an ARM might be a good choice for you. Just make sure you understand how much your rate and payment could go up when the introductory period is over.
If you plan to stay in your home for a long time, or just prefer the stability of a fixed monthly payment, a fixed rate mortgage is probably a better fit for you.
How are mortgage rates determined?
Mortgage rates are determined by a combination of factors — some you can control and some you can’t.
The main external factor is the economy. Interest rates tend to be higher when the US economy is booming and lower when it is struggling. The two main economic factors that influence mortgage rates are employment and inflation. When the number of jobs and inflation increase, mortgage rates tend to rise.
You can control your finance, in a certain way. The better your credit score, debt ratio and down payment, the lower your rate should be.
Finally, your mortgage rate depends on what type of mortgage you obtain. Government-backed mortgages (like FHA, VA, and USDA mortgages) charge the lowest rates, while jumbo mortgages charge the highest rates. You will also benefit from a lower rate with a shorter mortgage term.
How to choose a mortgage lender?
First, think about the type of mortgage you want. The best mortgage lender will be different for an FHA mortgage than for a VA mortgage.
A lender should be relatively affordable. You shouldn’t need a super high
to get a loan. You also want them to offer good rates and charge reasonable fees.
Once you’re ready to start shopping for homes, get pre-approved with your top three or four choices. A pre-approval letter indicates that the lender wants to lend you up to a certain amount, at a specific interest rate. With a few pre-approval letters in hand, you can compare each lender’s offer.
When you apply for pre-approval, a lender does a credit check. A bunch of tough inquiries on your report can hurt your credit score, unless it’s to hunt for the best rate.
If you limit your rate purchases to about a month, the credit bureaus will understand that you’re looking for a home and shouldn’t hold each individual claim against you.