Last Updated Feb 25, 2024
Mortgage and refinance rates are near an all time low! Our researchers have spent hours finding the best option for your personal situation. Compare rates, terms, mortgage types and view your rate today!
One of the best ways to get low mortgage rates is to compare multiple lenders. Not all lenders are created equal and choosing the wrong one can cost you tens of thousands in avoidable fees and interest. Today, the majority of homeowners are turning towards online mortgage lenders instead of traditional banks. Lower overhead costs allow online mortgage lenders to streamline the application process, speed up approval times, and pass the savings onto its consumers.
Comparing mortgage rates is one way to save money on your home loan. Testing the waters and seeing what mortgage lenders are offering will give you a better idea of what rates, terms, and mortgage types you may qualify for. With so much competition in the lending industry today, you can usually find a lower rate if you shop around and do a price comparison.
Fixed-rate mortgages keep the same interest rate over the life of your loan, which means your monthly mortgage payment always stays the same. Fixed loans typically come in terms of 15 years, 20 years, or 30 years. With a fixed rate, you generally need to pay more interest with a longer-term loan, and interest rates are typically higher than rates on variable-rate mortgages.
Unlike the stability of fixed-rate loans, variable-rate mortgages have fluctuating interest rates that can go up and down with market conditions. Many variable-rate mortgages have a fixed interest rate for a few years before the loan changes to a variable interest rate for the remainder of the term.
These rates are charged on a gradual upward curve, meaning your monthly payments are less at the start of a loan, and gradually increase as the loan term progresses. The actual interest rate doesn’t change, but the total amount you pay will decrease because you will be paying off more of the loan as time goes on.
There are a number of factors that may affect your interest rate that you should know.
Credit scores are probably one of the biggest factors that can affect your interest rate. Generally, consumers with higher credit scores tend to receive lower interest rates than consumers with lower credit scores. The reason being is that lenders use your credit scores to predict how reliable you will be in paying back your loan. Before applying for a mortgage loan, it is recommended that you check your credit, review your credit report for errors, and dispute any errors to raise your credit score.
Mortgage rates also depend on the price of your home and the total loan amount you seek to obtain. The amount you will need to borrow for your mortgage loan is the home price plus closing costs minus your down payment. In some situations, your closing costs and mortgage insurance may already be included in the amount of your mortgage loan.
Generally speaking, a larger down payment means a lower interest rate. To put it bluntly, many lenders see a lower level of risk when you have already invested more in your property. A good general rule of thumb is if you can put 20 percent or more down, you will usually get a lower interest rate. In some cases, if you are unable to make a down payment of at least 20 percent, lenders will usually require you to purchase a mortgage insurance which protects the lender in the event the borrower stops paying their loan.
The term, or duration of the loan, is how long you have to repay the loan. Generally, shorter term loans have lower interest rates and lower overall cost, but higher monthly payments.
As mentioned above, the type of interest rate you choose will affect your mortgage interest rate. Whether you go with a fixed rate, variable rate, or amortized will affect your overall rates.
There are several broad categories of mortgage loans such as conventional, FHA, USDA, and VA loans. Lenders ultimately decide which product to offer and each loan type has different eligibility requirements. Interest rates can be significantly different depending on what type of loan you choose. Sifting through your options and speaking with different lenders will help you get a better understanding of all the options available to you.