Understanding Home Loan Mortgage Rates

What are home loan mortgage rates?

Home loan mortgage rates are the interest the bank charges you for borrowing money to buy a home.
 
Your rate is a percentage, like 6.5%, and it impacts your monthly mortgage payment.
 
For example:
 
If you borrow $300,000 at a 6.5% rate over 30 years, your monthly payment amount will be higher than if your rate was 5.5%.
One percent may not seem significant, but over the life of the loan it adds up.
Even a small difference in rate can save you thousands.
Use our mortgage calculator to find out your estimated monthly payment. You can try different loan amounts and interest rates.

Why do mortgage rates go up and down?

Mortgage rates aren’t set in stone.

They change almost daily because they’re tied to what’s happening in the economy, such as:

• Inflation

• The Federal Reserve (aka “the Fed”)

• The bond market

• Overall demand for mortgages

 
The bottom line is this:
When the economy is strong, we see higher interest rates because there’s more demand for loans.
When the economy slows down, rates often drop as mortgage lenders try to attract more borrowers.

What affects your mortgage rate?

Although the overall market plays a role, your personal rate also depends on a number of factors including:

• Your credit score – Higher scores get better rates.

• Your down payment – Bigger down payments can lower your rate.

• Loan type – FHA, conventional, and jumbo loans all have different rates.

• Loan term – 15-year loans usually have lower rates than 30-year loans.

• Your debt-to-income ratio (DTI) – This shows how much of your income goes to your current debt. This includes credit cards, car loans etc.
   

Better personal finances improve your chance of qualifying for a great mortgage rate.
 
I’ll help you find the right loan and rate for your situation.

Fixed-rate vs. adjustable-rate — what’s the difference?

There are two main types of mortgage rates:

1.    Fixed-rate mortgage – Your rate stays the same for the life of the loan. Your monthly payment won’t change (except for taxes or insurance). This option is good for people who like stability and plan to stay in the home a while.
2.    Adjustable-rate mortgage (ARM) – Your rate starts low but can go up or down after a few years. These loans can save you money early on, but they carry more risk later. They might be a good fit if you don’t plan to live in the home long-term.

Not sure which is best for you? I’ll walk you through the pros and cons of each mortgage rate option.

Can I “lock in” my mortgage rate?

Yes. When you’re buying a home, you can lock in your mortgage rate for a specified amount of time.
This protects you if interest rates go up before closing.
Most rate locks last 30 to 60 days.
Some mortgage lenders offer longer locks or even “float-down” options.
These allow you to get a lower rate if one becomes available during the lock period.

How can I get a better mortgage rate?

Tips to help you get the best rate possible:
   •    Improve your credit score – Pay bills on time, reduce debt, and check your credit report.
   •    Save for a bigger down payment – A higher down payment lowers the risk or the mortgage lender.
   •    Keep your job and avoid large purchases – Mortgage lenders like to see stable employment, income, and spending.
   •    Work with a mortgage loan officer (like me) – I can shop multiple lenders, compare options, and find you a great rate.