Current Mortgage Rates
It's starting to get tough to come up with new ways to say this: today's mortgage rates have again broken records, and are at their lowest for 55+ years. It's been the same story for weeks.
Here are the national average headline figures from Freddie Mac for week ending July 22:
- 30-year, fixed rate mortgages (FRMs)--4.56 percent (fees and points: 0.7)
- 15-year, FRMs--4.03 percent (fees and points: 0.6)
- Five/one-year adjustable rate mortgages (ARMs)--3.79 percent (fees and points: 0.6)
- One-year ARMs--3.70 percent (fees and points: 0.7)
Mortgage Brokers' Business Surges
The Mortgage Bankers Association (MBA) concurs with Freddie Mac that current mortgage rates are at an all-time low, certainly for the lifetime of the former's survey. And it reports that the volume of mortgage loan applications finally responded last week by jumping 7.6 percent. The Purchase Index was up by a seasonally adjusted 3.4 percent, but refinance activity has increased by nearly 30 percent over the past four weeks, according to Michael Fratantoni, the MBA's vice president of research and economics.
Take a Fresh Look at Mortgage Choices
The Washington Examiner ran a timely feature July 23 that could help borrowers make the most of the unique opportunities offered by today's mortgage rates. Although the advice has largely already been covered previously by this shoprate.com column, it's worth repeating.
In essence, the message is: Don't automatically assume that a 30-year FRM is right for you. It may well be, but talk to your mortgage brokers or potential lenders about--or explore for yourself--other alternatives.
For instance, if you know you'll be moving home in the next few years, consider signing up for a 5/1 ARM. The interest will be fixed at an extremely affordable rate (currently a national average of 3.79 percent) for five years, and only becomes adjustable after that period. If you'll have moved by then anyway, why pay more?
Best Mortgage Rates for Shorter Term Loans
Here's another example. You're more than comfortably off, and are at a time in your life when you're focused on retirement. Why not look at a 15-year FRM? The rates are much lower, although your payment may rise because you'll be paying off the principal over a significantly shorter period.
However, if you can afford it, the benefits are incredible. Let's look at some actual figures using the shoprate.com mortgage calculator. Suppose you owe $200,000, on a $210,000 30-year FRM that you got in 2007 at the average rate for that sort of loan (6.25 percent) and your payments are $1,293 a month. If you refinance it at 4.56% (today's average rate) your monthly payments will be $1,020.51, and over the lifetime of the mortgage you'll pay $167,385 in interest.
If you opted for a 15-year FRM, your monthly repayments at today's 15-year rate of 4.06% would be higher at $1,485.40. That's an extra $465 a month. But, if you can afford that, you'll pay only $67,371 in interest over the term of the loan. That's a saving of nearly $100,000! And you'll be free of mortgage debt in just 15 years.
Compare Mortgage Rates
Of course, many people are still likely to find that a 30-year FRM is the best choice for them. But it's as important to make sure that you have the right sort of mortgage deal for your needs as it is to find the best mortgage rates.
Speaking of which, you can compare mortgage rates here.