Today's Mortgage Rates Move Back Above 6.5% | April 20, 2022 – Money


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Mortgage rates are up again. The average rate on a 30-year fixed-rate mortgage now at 6.75% — up nearly 0.4 percentage points from yesterday. The 30-year rate is currently more than 1.5 percentage points higher than it was a month ago. Other loan categories are seeing mixed rate movement.
Money’s daily mortgage rates reflect what a borrower with a 20% down payment and a 700 credit score — roughly the national average score — might pay if he or she applied for a home loan right now. Each day’s rates are based on the average rate 8,000 lenders offered to applicants the previous business day. Freddie Mac’s weekly rates will generally be lower since they measure rates offered to borrowers with higher credit scores.
Looking for a loan? Check out Money’s lists of the best mortgage lenders and best refinance lenders.
Most borrowers are attracted to the 30-year mortgage because of its predictable interest rate and long payback time, which result in lower monthly payments. It’s not the most economical option on the market, however, despite the relatively low payments. Compared to a shorter-term loan the interest rate will be higher. Since you’ll pay that rate longer, your overall loan costs will be higher.
The 15-year fixed-rate mortgage will not only have a shorter payback time but also a lower interest rate than a 30-year loan. This means your overall borrowing costs will ultimately be lower. The caveat is that your monthly payments will be significantly higher, since you’ll have to pay the loan off faster.
Use a mortgage calculator to determine which option is best for you.
Some borrowers prefer an adjustable-rate mortgage. An ARM will have a low introductory rate that is fixed for a set number of years before it becomes adjustable and starts resetting periodically. The interest rate on a 5/1 ARM, for instance, is fixed for five years and then resets annually.
While the initial interest rate on an ARM is usually very low, there is a potential for the rate to see a significant increase during its variable phase, leading to higher monthly payments. Consider this potential for higher rates and payments before deciding on an adjustable-rate loan.
The average rates for FHA, VA and jumbo loans are:
The average refinance rates for 30-year loans, 15-year loans and ARMs are:
Mortgage rates sank through 2020. Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people bought homes they may not have been able to afford if rates were higher. In January 2021, rates briefly dropped to the lowest levels on record, but trended slightly higher through the rest of the year.
Looking ahead, experts believe interest rates will rise more in 2022, but also modestly. Factors that could influence rates include continued economic improvement and more gains in the labor market. The Federal Reserve has also begun tapering its purchase of mortgage-backed securities and raised the federal funds rate for the first time in March to combat rising inflation. The Fed has signaled six more hikes are likely this year.
While mortgage rates are likely to rise, experts say the increase won’t happen overnight and it won’t be a dramatic jump. Rates should stay near historically low levels through the first half of the year, rising slightly later in the year. Even with rising rates, it will still be a favorable time to finance a new home or refinance a mortgage.
Factors that influence mortgage rates include:
There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes a little bit of work and will depend on both personal financial factors and market conditions.
Check your credit score and credit report. Errors or other red flags may be dragging your credit score down. Borrowers with the highest credit scores are the ones who will get the best rates, so checking your credit report before you start the house-hunting process is key. Taking steps to fix errors will help you raise your score. If you have high credit card balances, paying them down can also provide a quick boost.
Save up money for a sizeable down payment. This will lower your loan-to-value ratio, which means how much of the home’s price the lender has to finance. A lower LTV usually translates to a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender you have the money to finance the home purchase.
Shop around for the best rate. Don’t settle for the first interest rate that a lender offers you. Check with at least three different lenders to see who offers the lowest interest. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.
Also, take time to find out about different loan types. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan like a 15-year loan or an adjustable-rate mortgage. These types of loans often come with a lower rate than a conventional 30-year mortgage. Compare the costs of all to see which one best fits your needs and financial situation. Government loans — such as those backed by the Federal Housing Authority, the Department of Veterans Affairs and the Department of Agriculture — can be more affordable options for those who qualify.
Finally, lock in your rate. Locking your rate once you’ve found the right rate, loan product and lender will help guarantee your mortgage rate won’t increase before you close on the loan.
Money’s daily mortgage rates show the average rate offered by over 8,000 lenders across the United States the most recent business day rates are available. Today, we are showing rates for Tuesday, April 19, 2022. Our rates reflect what a typical borrower with a 700 credit score might expect to pay for a home loan right now. These rates were offered to people putting 20% down and include discount points.
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