Mortgage rates are at all-time lows right now, especially 15-year fixed-rate mortgages
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.Refinance rates have changed only slightly since last Friday. The 30-year refinance rate has risen since last week, while 10-year and 15-year refinance rates have decreased. All three rates have fallen since this time last month.How do 30-year fixed rates work?
A 30-year fixed mortgage comes with a higher interest rate than a shorter-term fixed-rate mortgage. The 30-year fixed rates used to be higher than adjustable rates, but 30-year terms have become the better deal recently.Your monthly payments on a 30-year term will be lower than on a shorter-term mortgage. You're spreading payments out over a longer period of time, so you'll pay less each month.
You'll pay more in interest in the long term with a 30-year term than you would for a 15-year mortgage, because a) the rate is higher, and b) you'll be paying interest for longer.How do 15-year fixed rates work?The 15-year fixed-rate mortgages headtopics.com
are more affordable than 30-year terms in the long run. You'll pay a lower interest rate on a 15-year term, and you'll pay off the mortgage in half the time.Your monthly payments will be higher for a 15-year mortgage than for a 30-year mortgage, though. You're paying off the same loan principal in a shorter amount of time, so you'll pay more every month.
How do 10-year fixed rates work?Many lenders offer similar rates on 10-year mortgages and 15-year mortgages, but you'll pay off your mortgage five years earlier.You might refinance into a 10-year mortgage, but a 10-year term isn't super common for an initial mortgage.
How do 5/1 ARMs work?An adjustable-rate mortgage, often referred to as an ARM, keeps your rate the same for the first few years, then changes it periodically. A5/1 ARMlocks in your rate for the first five years, then your rate will fluctuate once per year.
Although ARM rates are relatively low these days, you still may want to go with a fixed-rate mortgage. The 30-year fixed rates are comparable to or lower than ARM rates, so it could be good to lock in a low rate with a fixed mortgage rather than risk your rate going up later with an ARM. headtopics.com
, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.It may be a good time to get a mortgage or refinanceRefinance rates are at historic lows, so you may want to consider refinancing in the next few days, if possible. Starting December 1,
most borrowers will pay a 0.5% fee for refinancing. If you lock in a rate before December 1, you don't have to pay the new fee.But if your finances could use some work, it could still be in your best interest to wait to refinance. A poor credit score or a high debt-to-income ratio will result in a higher interest rate, which could cost you more than the 0.5% closing fee in the long run.
Whether you want to refinance or get an original mortgage, a fixed-rate mortgage is probably the best deal. Fixed rates are at all-time lows right now. English doesn't recommend applying for an ARM, though."I can't see one good reason why someone would choose to go with an ARM versus a 30-year fixed rate in today's market," English said. "Why take the risk when you can get a better rate in a 30-year loan?"
You don't necessarily need to rush to apply for a new mortgage, though. Mortgage rates will likely stay low well into 2021, if not longer. If you want to land the best rate possible, consider taking some of the following steps before submitting an application: headtopics.com
Increase your credit score.A score of at least 700 will help you out — but the higher your score, the better your interest rate. The most important factor in boosting your credit score is making all your payments on time. You can also pay down debts aggressively or let your credit age.
Save more for a down payment.You may be able to place as little as 3% down on a conventional mortgage. But lenders reward larger down payments with lower interest rates, so you may want to save more than the minimum requirement. Because rates should stay low for a while, you probably have time to save more for a down payment.
Lower your debt-to-income ratio.Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. Most lenders want to see aDTI of 36% or less, but a lower ratio can result in a lower rate. To improve your ratio, look for chances to increase your income or pay down debts.
If you feel comfortable with your financial situation, now could be a good time to get a fixed-rate mortgage or refinance. Read more: Business Insider »
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thanks What good does it do you when home prices are at all-time highs?