These are the latest mortgage rates. Is it time to get a mortgage?

What’s going on with mortgage rates?

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In June, 30-year fixed-rate mortgages topped 6%, but have since fallen. The national average for 30-year fixed-rate mortgages is now 5.54%, while for 15-year fixed-rate mortgages it is 4.80%, according to August 3 Bankrate data. Here are some things to know right now if you want a mortgage. (See the lowest mortgage rates you can get now here).

15-year mortgage rates continue to be lower than 30-year mortgage rates – so if you can afford a shorter term, do so. Adjustable rate mortgages (ARMs) may also be worth considering, but only if it suits your long-term plans. The latest Bankrate data shows that average rates on 5/1 ARMS (rates are fixed for five years and then adjusted) are 4.18%, lower at the start than 15- and 30-year fixed-rate mortgages. But it’s important to note that ARMs tend to make more sense for short-term homeowners who only plan to stay in the same home for 5-7 years. As ARM rates become variable, “ARMs can be risky, and in the long run they may end up costing more than a fixed mortgage with a higher initial rate,” said economic analyst Jacob Channel. principal of LendingTree, at MarketWatch Picks.

No matter what type of mortgage you get, experts recommend shopping around, getting quotes from 3-5 lenders and determining your credit score (improve if needed) and debt-to-income ratio (DTI). ), which can help you determine what rate you can expect to pay. To calculate your DTI, divide your monthly debt payments (mortgage, credit card payments, car, student or personal loans, child support) by your gross monthly income. If the number you come out with is 36% or less, your chances of qualifying for a mortgage, and at a better rate, are better than if you come out with a higher number like DTI.

There are also other ways to lower your mortgage rate, such as using discount points, which are fees paid to lower an interest rate; if you can afford to buy them, they can save you a lot of money in the long run. Typically, one point lowers the interest rate by 0.25%, although this may vary. “When you pay cashback points, you give the lender a portion of the interest payments up front in exchange for paying less interest each month,” Holden Lewis, real estate and mortgage expert at Nerdwallet, recently told MarketWatch Picks. But note that there may be limits to the number of discount points you can buy, and buying points may not make sense, especially if you don’t plan on staying in the house for long.

Any advice, recommendations, or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our business partners.

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