Mortgage Rates Fall for Week of March 8

It's widely predicted that low mortgage rates can't last forever, but for home buyers and refinancing homeowners, the week of March 8 gave a reprieve, as average combined mortgage rates fell slightly. HSH Associates reports in its weekly national interest rate benchmarks that 30-year fixed-rate mortgage (FRM) rates fell from 5.34% to 5.31%, while rates for a 15-year FRM averaged 4.69%, down from 4.73%. First-time buyers looking to minimize monthly payments for an initial fixed period may benefit from a 5/1 adjustable rate mortgage (ARM), with rates moving from 4.48% to 4.44% on average.

Lower Mortgage Rates Offer Flexibility

Lower mortgage rates can assist with buying your next home in several ways:

• Lower monthly payments. Given identical fixed-rate loan amounts and repayment terms, lower mortgage rates yield lower monthly payments. You can use the APR (annual percentage rate) when comparing mortgage quotes; the APR is a single rate that takes into account the costs of a particular mortgage loan, including mortgage rate, lender fees, and closing costs, assuming you hold the mortgage for its entire term. If low monthly payments are a priority, you might consider pay more in up-front costs to receive the best mortgage rate.
• More buying power. Because of the lower monthly payments, lower mortgage rates can allow you to borrow more. If you've found a home you want at the higher end of your budget, getting the lowest mortgage rate can help with affordable financing. Getting preapproved for a mortgage loan can also enhance negotiating power with sellers, who will know you're financially qualified to make an offer.
• Pay off your mortgage faster. The less interest you pay, the faster you can pay down your mortgage balance. In an amortizing loan, during the first years of making payments, most of your payment is credited to mortgage interest. As you get farther into your loan term, more of your payment will be applied toward your principal balance. The lower your interest rate, the sooner you can start making a dent in the balance. Another option with low mortgage rates is to see if you qualify for a 15-year mortgage. Your mortgage payments will be higher than with an equivalent home loan with a 30-year term, but if you can support the payment, you can save thousands of dollars in interest charges with a shorter mortgage repayment term and be free and clear in less time.

Our live database of current mortgage rates can help you find the best mortgage rates in your area.