Mortgage rates have shifted since last week and month — rates for loans have remained pretty steady, while rates to refinance have mostly risen in recent days (but not by much). Overall, it’s a good day to lock in a low rate.
If you’re ready to buy or refinance, you’ll probably want a fixed-rate mortgage rather than an adjustable-rate mortgage. ARM rates are starting higher than fixed rates right now, and you’d risk your rate increasing even more in a few years. It’s safer to lock in an all-time low rate while you can.
A mortgage rate is the interest you pay on the money you borrow from a lender to buy or refinance your home. It’s basically the fee you pay for borrowing, expressed as a percentage. For example, you may take out a $200,000 mortgage, plus a 2.75% interest rate.
There are two types of mortgage rates: fixed and adjustable.
A fixed-rate mortgage locks in your rate for the entire length of your mortgage. Even if rates in the US market increase or decrease, your rate will stay the same. This is an especially great deal right now, as rates are at historic lows.
An adjustable-rate mortgage keeps your rate the same for a predetermined amount of time, then changes it periodically. A 10/1 ARM locks in your rate for the first 10 years, then the rate fluctuates once per year. This is a riskier approach these days, because ARM rates are starting higher than fixed rates, and you risk your rate going up later.
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 thriving and lower when it’s struggling. The two main economic factors that impact mortgage rates are employment and inflation. When employment numbers and inflation go up, mortgage rates tend to increase.
Finally, your mortgage rate relies on what type of mortgage you get. Government-backed mortgages (like FHA, VA, and USDA loans) charge the lowest rates, while jumbo mortgages charge the highest rates. You’ll also get a lower rate with a shorter mortgage term.
Each type of mortgage has a different minimum credit score requirement. Here’s how it typically breaks down:
- Conforming: 620
- Jumbo: 700
- FHA: 580 (or 500 if you have at least a 10% down payment)
- VA: 640
- USDA: 640
These are just the general rules of thumb, though. Each lender has the right to require a higher or lower credit score. (Although the FHA minimums listed here are the lowest a lender will allow.)
If your credit score is higher than the minimum a lender requires, you could get a better mortgage interest rate.
Learn more and get offers from multiple lenders »Mortgage rates last week and monthMortgage rate trends
Over the past week and the past month, mortgage rates have stayed in the same general range: between 2.40% (15-year fixed last week) and 4.30% (7/1 ARM last month). While some rates are rising and others fall by a few basis points here and there, the overall pattern has stayed pretty steady.
Refinance rate trends
Rates for conventional refinance loans have risen across the board since last week, and they’ve fluctuated slightly since last month. Rates for refinancing through government loans show a slightly different pattern: Rates for a 30-year FHA refinance dropped by more than 10 bases points, while rates for refinancing with a VA loan remained steady, budging by a single basis point.
Mortgage and refinance rates by state
Check the latest rates in your state at the links below.
About the authors
Laura Grace Tarpley is an editor at Personal Finance Insider, covering mortgages, refinancing, and lending. She is also a Certified Educator in Personal Finance (CEPF). Over her five years of covering personal finance, she has written extensively about ways to navigate loans.
Ryan Wangman is a reviews fellow at Personal Finance Insider reporting on mortgages, refinancing, bank accounts, bank reviews, and loans. In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership.
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