Are you a homebuyer shopping for a mortgage? Let's see how your finances could be affected.
A couple of important mortgage rates are higher today. Average 15-year fixed mortgage rates were static, while average 30-year fixed mortgage rates moved up. At the same time, average rates for 5/1 adjustable-rate mortgages increased. Mortgage interest rates are never set in stone, but interest rates are at historic lows. If you plan to finance a home, now might be an excellent time to secure a fixed rate. Before you purchase a house, remember to take into account your personal needs and financial situation, and compare offers from multiple lenders to find the right one for you.
The average 30-year fixed mortgage interest rate is 3.24%, which is a growth of 5 basis points as seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed mortgage will often have a greater interest rate than a 15-year fixed rate mortgage -- but also a lower monthly payment. Although you'll pay more interest over time -- you're paying off your loan over a longer timeframe -- if you're looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.
The average rate for a 15-year, fixed mortgage is 2.50%, which is the same rate from seven days ago. You'll definitely have a bigger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. However, as long as you can afford the monthly payments, there are several benefits to a 15-year loan. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.
A 5/1 ARM has an average rate of 3.24%, an addition of 6 basis points from seven days ago. With an ARM mortgage, you'll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. But changes in the market might cause your interest rate to increase after that time, as detailed in the terms of your loan. Because of this, an ARM could be a good option if you plan to sell or refinance your house before the rate changes. If not, shifts in the market could significantly increase your interest rate.
We use data collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the US:
| Product | Rate | Last week | Change |
|---|---|---|---|
| 30-year fixed | 3.24% | 3.19% | +0.05 |
| 15-year fixed | 2.50% | 2.50% | N/C |
| 30-year jumbo mortgage rate | 2.74% | 2.74% | N/C |
| 30-year mortgage refinance rate | 3.22% | 3.16% | +0.06 |
Rates as of Dec. 29, 2021.
When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. Make sure to consider your current finances and your goals when trying to find a mortgage. A range of factors -- including your down payment, credit score, loan-to-value ratio and debt-to-income ratio -- will all affect the interest rate on your mortgage. Generally, you want a good credit score, a higher down payment, a lower DTI and a lower LTV to get a lower interest rate. The interest rate isn't the only factor that affects the cost of your home — be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Be sure to comparison shop with multiple lenders -- like credit unions and online lenders in addition to local and national banks -- in order to get a mortgage that's right for you.
One important thing to keep in mind when choosing a mortgage is the loan term, or payment schedule. The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are fixed for the life of the loan. For adjustable-rate mortgages, interest rates are set for a certain number of years (commonly five, seven or 10 years), then the rate adjusts annually based on the current interest rate in the market.
One important factor to think about when choosing between a fixed-rate and adjustable-rate mortgage is the length of time you plan on living in your house. If you plan on living long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. However you might get a better deal with an adjustable-rate mortgage if you only have plans to keep your home for a few years. The best loan term is entirely dependent on your specific situation and goals, so make sure to think about what's important to you when choosing a mortgage.