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Terms and Phrases that may be used in this Mortgage Rate Table
Upfront costs: The upfront costs are charged for originating the loan. These costs are commonly labeled as Origination, Application, Processing, Underwriting, or Administration fees. The upfront costs may not include all costs associated with securing your mortgage. Please visit the Consumer Financial Protection Bureau’s website or consult a loan officer or broker for more information.
Points: Points are fees paid directly to the lender in exchange for a reduced interest rate. A point is equal to 1% of the borrowed funds. By paying points, you save money on interest over your mortgage’s term.
5-year cost: This is an estimated amount you’ll pay in interest and costs, such as the upfront costs and points, for the identified time. The estimated amount does not include principal payments or other costs, such as taxes, insurance, or private mortgage insurance. Your actual loan terms, such as the rate, annual percentage rate, monthly payment, and upfront costs, may be different because of other factors, such as your credit score, income, and employment history.
Calculate your monthly payment:
Principal: The face value of a loan, independent of the interest charged on the loan amount.
Interest: Payments made to a lender by a borrower in exchange for a loan.
Property Tax: Any tax on real estate or certain other forms of property.
Private mortgage insurance (PMI): An insurance policy that compensates lenders for losses from a mortgage loan default.
Homeowner association (HOA): A private association formed by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision.
One-time fees breakdown: These fees are estimates of the fees charged by the lender for processing, approving and funding a loan.
What Are Today’s Mortgage Rates?
On Monday, November 23, 2020, according to Bankrate’s latest survey of the nation’s largest mortgage lenders, the average 30-year fixed mortgage rate is 2.950% with an APR of 3.260%. The average 15-year fixed mortgage rate is 2.460% with an APR of 2.780%. The average 5/1 adjustable-rate mortgage (ARM) rate is 3.030% with an APR of 4.060%.
Current Mortgage and Refinance Rates
|30-Year Fixed Rate||2.990%||3.190%|
|30-Year FHA Rate||3.230%||3.560%|
|30-Year VA Rate||2.880%||3.070%|
|30-Year Fixed Jumbo Rate||3.000%||3.060%|
|20-Year Fixed Rate||3.040%||3.290%|
|15-Year Fixed Rate||2.530%||2.750%|
|15-Year Fixed Jumbo Rate||2.540%||2.590%|
|5/1 ARM Rate||3.120%||4.090%|
|5/1 ARM Jumbo Rate||2.890%||4.030%|
|7/1 ARM Rate||2.980%||3.970%|
|7/1 ARM Jumbo Rate||2.970%||3.930%|
|10/1 ARM Rate||3.140%||3.960%|
|30-Year Fixed Rate||2.950%||3.260%|
|30-Year FHA Rate||3.210%||3.780%|
|30-Year VA Rate||2.950%||3.120%|
|30-Year Fixed Jumbo Rate||2.930%||3.040%|
|20-Year Fixed Rate||2.880%||3.180%|
|15-Year Fixed Rate||2.460%||2.780%|
|15-Year Fixed Jumbo Rate||2.440%||2.510%|
|5/1 ARM Rate||3.030%||4.060%|
|5/1 ARM Jumbo Rate||2.800%||4.000%|
|7/1 ARM Rate||2.930%||3.950%|
|7/1 ARM Jumbo Rate||2.870%||3.930%|
|10/1 ARM Rate||3.000%||3.910%|
Rates as of Monday, November 23, 2020
These rate averages are based on weekday mortgage rate information provided by national lenders to Bankrate.com. These marketplace average rates for a variety of purchase loan types are updated daily, though it is possible rates have changed since this was last updated.
What to Know About the Largest National Banks
The top five lenders in the U.S. issued over 1.4 million mortgages last year, according to a Consumer Financial Protection Bureau report. Mortgage lenders come in all shapes and sizes, and many aren’t household names because they don’t deal directly with borrowers. If you’ve been shopping for a mortgage lender, it’s likely you’ve come across one of the following companies, which are the top five lenders in the U.S. based on loans closed.
Quicken Loans is an online mortgage lender serving all 50 states. Quicken Loans mortgage processing platform is Rocket Mortgage. Through Quicken Loans’ Rocket Mortgage site you can go through the preapproval process and submit a mortgage application. While some borrowers prefer the personal touch of working with a local lender, Quicken Loans is very popular and closed more mortgage loans in 2019 than any other lender.
United Shore Financial Services
United Shore is the top wholesale lender in the U.S., which is why you may not be familiar with the name. A wholesale lender doesn’t issue mortgages directly to consumers. Instead it supplies the money for the loans to other front-facing lenders, like mortgage brokers, credit unions, and banks. Wholesale lenders don’t typically keep the mortgages they issue long term. They usually sell them to investors on the secondary mortgage market.
Wells Fargo is a traditional brick-and-mortar bank with over 8,000 locations around the world. It offers mortgages and other financial services as well, like bank accounts, personal loans, and retirement services. Getting a mortgage with a traditional bank like Wells Fargo might appeal to some borrowers, since it allows you to manage multiple accounts with the same company.
JPMorgan Chase is one of the biggest banks in the world and one of the largest mortgage lenders in the U.S. Chase also offers personal bank accounts, credit cards, auto loans, and a wide range of other financial services. If you have a banking relationship with Chase, it occasionally runs promotions offering incentives for existing customers who then take out a mortgage.
Fairway Independent Mortgage Corporation
Fairway Independent Mortgage has over 400 locations nationwide and is licensed in all 50 states. It is primarily a direct lender, but also operates a mortgage wholesale division. In addition to being able to apply in person at one of its office locations, you can apply online. Fairway offers a wide range of mortgages, but because it’s not a full-service financial institution it doesn’t issue other types of accounts or credit lines, like home equity loans.
NextAdvisor’s Guide to Mortgages
What Is a Mortgage?
A mortgage is a type of secured loan that is used to purchase a home. The word “mortgage” actually has roots in Old French and Latin, and literally means “death pledge.” Thankfully, it was never meant to be a loan you paid for until you died (although it might feel that way), but rather a commitment to pay until the pledge itself “died” (i.e. the loan was paid off).
You can also get a mortgage to replace your existing home loan, which is known as a refinance.
What Is a Mortgage Rate?
A mortgage rate is the interest lenders charge on a mortgage. Mortgage rates come in two forms: fixed or variable. Fixed rates never change for the life of your loan — and in exchange for this certainty, the rate is higher on longer loans. Variable-rate mortgages can have lower interest rates up front, but fluctuate over the term of your loan based on broader economic factors. How frequently a variable-rate mortgage changes varies based on the loan’s terms. For example, a 5/1 ARM (adjustable rate mortgage) would have a fixed rate for the first five years of the loan, then change every year after that.
How Does a Mortgage?
A mortgage is a type of secured loan where the property – often your home – is the collateral. So you’ll never be able to take out a mortgage without having some sort of real estate attached to it. Mortgage loans are issued by banks, credit unions, and other different types of lenders.
Aside from paying the loan back, you pay for a mortgage in two ways: fees and interest. Interest is paid on your loan balance throughout the life of the loan, and is built into your monthly payment. Mortgage fees are usually paid upfront, and are part of the loan’s closing costs. Some fees may be charged annually or monthly, like private mortgage insurance.
Mortgages are repaid over what is known as the loan term. The most common loan term is 30 years. You can also get a mortgage with a shorter term, like 15 years. Short-term loans have higher monthly payments, but lower interest rates. Mortgages with longer terms have lower monthly payments, but you’ll typically pay a higher interest rate.
What is the Difference Between APR and Interest Rate?
The interest rate is the cost of borrowing the money, and it is advertised as a percentage of the loan. APR stands for annual percentage rate, and it includes the interest rate plus other fees associated with the mortgage. So the APR will provide you with a better idea of the total cost of financing the loan. You may find lenders offering the same interest rate and monthly payments, but if one is charging higher upfront fees, then the APR will be higher.
The Federal Truth in Lending Act requires lenders to disclose the APR, but which fees are included in it can vary. So when comparing APRs of different lenders, ask which fees aren’t included for better comparison.
What Are the Different Types of Mortgages?
Mortgages come with all sorts of different interest rates and terms. These influence not only how long it will take to pay off your loan, but also how much your monthly payments will be.
These are some of the most common types of mortgages home buyers use:
A fixed-rate mortgage has a set interest rate for the life of the loan. With this type of loan, your mortgage rate will never change. While your overall monthly payments could still fluctuate based on property taxes or other factors changing over the course of your mortgage, a fixed rate locks in how much you’ll pay in interest over the course of your loan. And if interest rates drop to below your current rate, you can refinance to a lower rate.
Two of the more popular mortgage terms for fixed-rate loans are 15- and 30-year mortgages.
ARM (Adjustable Rate Mortgage)
An ARM is usually a 30-year term loan with an interest rate that changes over time, in line with market averages. When the interest rate changes depends on the loan. Common ARM terms are 5/1, 7/1, and 10/1. The first number designates the first year your interest rate will change, and the second number is how frequently the interest rate resets after the first time. So a 5/1 ARM adjusts the rate after 5 years, and then annually after that. Most ARMs reset annually after the initial adjustment.
There are several types of government-secured loans backed by different departments of the government, including the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), and U.S. Department of Agriculture (USDA). You can apply for these loans through approved lenders, such as most national banks and many smaller regional lenders.
Qualifying for these loans is a bit different than with conventional loans. For example, USDA loans are only available for homes in an eligible rural-designated area, and VA loans are only an option if you meet the military service requirements. FHA loans typically have lower credit score requirements, but you will have to pay mortgage insurance for the life of the loan.
What Is the Best Mortgage Loan Type?
The best mortgage is the one that helps you meet your housing needs for as little financing costs as possible. There are a few factors to consider when it comes to getting the right mortgage.
Some experts recommend getting a 15-year mortgage because you’ll pay far less interest and be debt free in half the time compared to a 30-year loan. With a 30-year loan, your monthly payments can be significantly lower, but you’ll pay much more in interest over the course of your term. So it’s a tradeoff.
There are also tradeoffs in choosing a government-backed versus a conventional loan. For example, FHA mortgages can have lower credit score requirements than conventional loans. But unlike conventional loans, FHA loans require mortgage insurance even if your loan-to-value ratio drops below 80%.
If you want a set interest rate for the life of the loan, and more stable monthly payments, then a fixed-rate mortgage is ideal. The interest rate on a fixed-rate mortgage never changes. In exchange for this security, the rate can be a bit higher than with a similar adjustable rate mortgage (ARM). ARMs have a set interest rate for a certain number of years (usually, five, seven, or 10 years), and then the rate adjusts annually. An ARM might make sense if you plan on refinancing your mortgage in the future, or you might sell the house before the rate adjusts.
Regardless of what loan type you go with, remember, it’s not the loan you have to keep forever. Even if you stay in the same home for the rest of your life, you can refinance your mortgage to take advantage of better terms or rates.
How Much Can I Borrow for a Mortgage?
The amount of money you can borrow is affected by the property, type of loan, and your personal financial situation.
During the mortgage preapproval process the lender will look at your overall financial profile to determine how much it is willing to let you borrow. A big factor in this process is your debt-to-income ratio (DTI). Your DTI is calculated by dividing your total monthly debt payments by your monthly income. In most cases, the maximum DTI a lender will allow is 43%. So if you make $5,000 a month your mortgage payment and other monthly debt payments can’t exceed $2,150.
To protect its investment, a lender will typically only let you borrow a certain percentage of a property’s value. So the value of the property can also limit how much you can borrow. Most mortgage loans require a down payment of anywhere from 3% to 20%. You may be able to borrow 100% of the property’s value with certain government-backed loans, like Department of Veterans Affairs (VA) Loans or U.S. Department of Agriculture Rural Development (USDA) loans.
Finding the Best Mortgage Rate
How Do I Find the Best Mortgage Rate?
Finding the best home mortgage rate is a matter of knowing your goals and picking the right tool to get the job done. The best mortgage for you may not always be the one with the lowest interest rate. Factors like how long you plan on living in your home will impact your decision.
If you plan on living in your new home long-term, then a fixed-rate mortgage is ideal. Mortgage rates today are very reasonable for fixed-rate 10-, 15-, or 30-year mortgages, and being able to lock in low rates is a smart choice. But you can get lower mortgage rates with some adjustable-rate loans. So if you plan on only keeping your home (or current mortgage) for three to 10 years, then you may be able to pay less interest with an ARM.
How Do I Find Personalized Mortgage Rates?
Finding personalized mortgage interest rates is as easy as talking to your local mortgage broker or searching online. While most factors that impact mortgage interest rates are out of your control, rates still vary from person to person. Lenders charge higher home mortgage rates to borrowers they deem more risky. So having a high credit score (740+) will get you the best interest rates. Lenders also look at how much you are borrowing compared to the home’s value; this is known as loan-to-value, or LTV. You’ll get a better rate when the LTV is below 80%. So if your future home has a value of $200,000, you’ll get the best rates if the loan is for $160,000 or less.
When shopping around for the best rates consider a variety of lenders, like local banks, national banks, credit unions, or online lenders. Be sure to compare not only interest rates, but also the fees and other terms of the mortgage. Also, mortgage rates are constantly changing, so getting rate quotes from multiple lenders around the same time makes it easier to get an accurate comparison. If that’s too much legwork, you could work with a mortgage broker. Mortgage brokers don’t directly issue loans, instead they work with a number of lenders to find you the best deal. But their services aren’t free, they work on commission paid by either the lender, or the borrower.
What Is a Good Mortgage Rate?
Average mortgages rates have been at historically low levels for months, even dipping below 3% for 30-year fixed-rate loans the first time ever. If you can get a mortgage with an interest rate below 3%, you could be getting the deal of a lifetime.
But even if you’re getting a low interest rate, you need to pay attention to the fees. Hidden inside a good mortgage rate can be excessive fees or discount points that can offset the savings you’re getting with a low rate.
Discount points are fees you pay the lender upfront in exchange for a lower interest rate. Buying down the rate with discount points can save you money if you’re planning on keeping your home for the long term. But if you’re going to sell or refinance before the full loan term is up, paying more fees upfront may not make sense.
Discount points can be part of a good deal, but you need to make sure you know when they are being added to your loan. When you’re comparing mortgage offers, be sure to ask if the interest rate includes discount points.
Why Do Mortgage Rates Move?
Mortgage rates fluctuate for the same reasons the price of homes change – supply, demand, inflation, and even the U.S. employment rate can all impact mortgage rates. But the demand for homes isn’t necessarily a sign of where mortgage rates are headed. The best indicator of whether rates will go up or down is the 10-year Treasury bond rate.
When a lender issues a mortgage it takes that loan and packages it together with a bunch of other mortgages, creating a mortgage-backed security (MBS), which is a type of bond. These bonds are then sold to investors so the bank has money for new loans. Mortgage bonds and 10-year Treasury bonds are similar investments and compete for the same buyers, which is why the rates for both move up or down in tandem.
If the demand for these safer bond investments is low, the mortgage interest rate increases to attract buyers. When there is strong demand for these investments, they can be sold more easily and the mortgage interest rates decrease. That’s why, in a slumping economy, when more investors want to purchase safer investments, like mortgage-backed securities and treasury bonds, rates tend to go down.
COVID-19’s impact on the economy has driven mortgages rates down. A big reason for this is the Federal Reserve wants to keep interest rates low to stimulate economic growth. Lower interest rates encourage businesses and consumers to borrow money. The Federal Reserve has been purchasing MBS and treasury bonds, and this increased demand has led to the lowest mortgage rates on record.
When Is the Right Time to Get a Mortgage?
Before you apply for a mortgage, you should have a proven reliable source of income and enough saved up to cover the down payment and closing costs. If you can save at least 20% for a down payment, you can skip paying for private mortgage insurance and can qualify for better interest rates.
At the end of the day, the best time to apply is when you’re ready. But there are other details to consider when timing your home purchase. Because home sales slow down during the winter, you may be able to get a better price in January or February. However, general nationwide trends won’t necessarily apply to your local real estate market. To get a better sense of the nuances of your area it’s important to talk with local experts.
How Do I Choose a Mortgage Lender?
When it comes to choosing a mortgage lender, picking the right one can save you in the long run, but you’ll need to know what you’re comparing. The right lender for you might not always be the one with the best mortgage rates, although that’s often the biggest factor to consider. You’ll also want to scrutinize other aspects of your loan, like the monthly payment, closing costs, down payment, and the lender’s processing fees.
Because there is so much to look at, it’s important to work with a competent lender you trust. You want someone who can pull the curtain back and show you what all these costs mean and help you make the best choice for your situation. To find a trusted lender you can look at online reviews, or even better, ask around. Your real estate agent and friends who recently purchased a home are great sources for mortgage lender recommendations.