If you plan to buy a home, you'll most likely need to get a mortgage. A good starting point for understanding mortgages is to know the different types available and the associated rates. Mortgage rates fluctuate, but having a basic understanding can help you through the homebuying process.
Current conventional national mortgage rates
Rates are effective 12/07/2021 and are subject to change without notice. APR shown is provided by a partner of ConsumerAffairs.
The APR shown of 3.320% is available for a 30-year fixed rate loan in the amount of $200,000 for consumers with loan-to-value of at least 80%.
The APR shown of 3.157% is available for a 20-year fixed rate loan in the amount of $200,000 for consumers with loan-to-value of at least 80%.
The APR shown of 2.678% is available for a 30-year VA fixed rate loan in the amount of $200,000 for consumers with loan-to-value of at least 80%.
The APR shown of 2.473% is available for a 10-year fixed rate loan in the amount of $200,000 for consumers with loan-to-value of at least 80%.
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Mortgage rates FAQ
- What is a mortgage?
- A mortgage is a loan you get from a lender for a home or piece of property. The loan has a mortgage interest rate and a principal amount you'll pay each month. In the agreement, the home is the collateral for the loan. In other words, if you default on the mortgage payment, the lender can take the home and sell it in a foreclosure.
- What is a mortgage interest rate?
- A mortgage rate is the interest charged on a mortgage. It's typically set by lenders and can stay fixed or fluctuate, depending on conditions in a mortgage agreement. Mortgage rates vary over time, and your credit score has a significant impact on the rate you receive. Mortgage rates rise and fall by interest rate cycles and can affect the overall home market.
- What is the difference between APR and interest rate?
- The interest rate is the percentage you pay over time based on the principal loan amount. The annual percentage rate (APR) is the figure that represents the interest and also additional fees like private mortgage insurance and loan origination fees. The APR is higher than the interest rate because it includes the additional costs.
- What is a good mortgage rate?
- Generally, anything below 3% is considered a good interest rate at the time of publishing. Mortgage rates change daily, and the mortgage rate you can qualify for depends on several factors, including your credit score, the type of loan and the amount of your down payment.
- What is a good APR?
- Whether you're getting a good APR depends on what type of loan you have, your credit score and your credit history. It's difficult to say exactly what a good APR is because this varies over time. Lenders can help you understand what's best based on a range of factors.
- What is a mortgage rate lock?
- If you qualify for a good interest rate, you can lock in the rate for a period — usually 30 to 60 days. There is sometimes a fee. Some rate locks also protect you if there's a lower interest rate during your locked-in period.
- When should I lock in my mortgage rate?
- If rates are on an upward trend, you might want to lock in a mortgage rate. Usually you can lock in a rate after the initial approval of the home loan. You can usually extend a rate lock period for a fee with most lenders.
- What is a discount point?
- If you pay the lender mortgage discount points, it lowers your interest rate. Each discount point costs 1% of your loan amount. For example, for a $200,000 mortgage, one discount point would cost $2,000. Buying discount points means you'll have a lower monthly payment.
- How much does one point lower your interest rate?
- Usually, each discount point lowers the interest rate by 0.25%. You can buy more than one discount point. While 0.25% might not seem significant, it can add up to a sizable amount over the life of the loan.
- How does the Federal Reserve affect mortgage rates?
- The Federal Reserve rate makes it more expensive for lenders to borrow money. The lenders pass this cost on through increased mortgage interest rates for home loans.
- How much can I borrow for a mortgage?
- The amount you can borrow for a mortgage depends on several things, including:
- Your credit score
- How much you have for a down payment
- Your income
- Your debt-to-income ratio
- The type of loan
- The price of the home
When looking at income, different lenders have different requirements. Use our resource to calculate how much house you can afford.
- What is the best credit score for getting a mortgage?
- Different mortgage loans have different credit score requirements. Conventional loans usually have a credit score threshold of 620. FHA and VA loans sometimes go as low as 580. There are loan programs for lower credit scores, but they have higher interest rates. For more information, learn how to find the best home loans with bad credit.
- How do I choose a mortgage lender?
- Finding the best mortgage rate starts with researching different mortgage lenders. Then, you can decide which lender has the right loan program for you and can offer the best interest rate. In addition to loan types and interest rates, you should look at the lender’s reputation and customer reviews.
- How do I get a mortgage?
- You can begin the process of getting a mortgage loan by finding a lender to work with. Read about the steps to get a mortgage for more information.
Types of mortgage rates
There are two main types of mortgage rates: fixed and adjustable.
A fixed-rate mortgage refers to a loan with a constant interest rate throughout the loan term. This means that the interest rate is the same from the beginning until the mortgage is paid off. Terms for fixed-rate mortgages vary, ranging from 10 to 30 years. It's a popular choice for homebuyers because they know exactly how much they'll pay each month over the life of the loan.
An adjustable-rate mortgage (ARM) is a mortgage with an interest rate that changes throughout the loan period. Only the initial interest rate is fixed in an adjustable-rate mortgage. After the completion of a specified period, the interest rate can increase, decrease or reset on a monthly or yearly basis.
The interest rate of an adjustable-rate mortgage usually depends on an index or benchmark. The benchmark or index depends on the type of loan, but, in most cases, it is aligned to the federal funds rate or the London Interbank Offered Rate (LIBOR). Adjustable-rate mortgages are also called floating mortgages or variable-rate mortgages.
What factors impact mortgage rates?
There are several factors that affect mortgage rates. The top factors are:
- Credit scores: If you have a higher credit score, you are more likely to receive a lower interest rate. If you have a lower credit score, your interest rate will be higher. Lenders use credit scores to determine a borrower’s likelihood of paying back a loan.
- Total home loan amount: The amount you borrow is the price of the home minus the closing costs and down payment, in most cases. The closing costs may be included in the mortgage loan, however.
- Home location: Most lenders take the state or your home location into consideration before deciding on the interest rate. If you are interested in getting a rough idea of your potential rates, talk to multiple lenders in your area.
- Interest rate type: There are two basic types of mortgage rates: adjustable and fixed. Fixed interest rates do not change throughout the loan repayment period, while adjustable, or floating, rates change with the market.
- Loan type: Rates heavily depend on the type of mortgage loan you and your lender choose. Some broad categories of loan types are VA, USDA, conventional and FHA loans. Each type has different eligibility criteria and requirements. Mortgage lenders can help you determine which loans you’re eligible for and the best one for your situation.
- Loan term: The loan term is the time in which you have to repay the loan. If you choose a shorter term, the interest rate is likely to be lower, but this also means higher monthly payments.
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