A few basis points here or there may not matter much when considering all of the factors involved in selecting your next home loan or mortgage refinance. But mortgage rates rising over time can impact your plans for buying or refinancing a home. HSH Associates reports that average combined mortgage rates for a 30-year fixed-rate mortgage (FRM) rose by 5 basis points to 5.17 percent, while rates for a 15-year FRM ticked up by one basis point to 4.48. Rates for a 5/1 adjustable rate-mortgage (ARM) dropped by 3 basis points to 3.80 percent.
Where will mortgage rates go?
Mortgage rates have risen for three consecutive weeks -- what's been causing the rise?
Increased home sales are likely fueling the rising rates, as pending home sales increased 2 percent in December. If this pattern is maintained, rates are likely to continue to increase in the coming months. If this prompts you to jump onto the home buying bandwagon, be sure to learn what factors into a mortgage first.
What makes a mortgage?
For the serious home buyer, getting several mortgage quotes for comparison is a must. Be aware that lender fees and points add to the cost of a home loan, so avoid focusing on mortgage rates alone however. During the loan approval process, many variables can influence changes in your original mortgage quote including:
- Your credit score: Your FICO credit score impacts the mortgage rates and lender fees you'll pay. In today's conservative credit environment, a credit score of 740 or more may be required for receiving optimum mortgage rates and terms.
- Credit purchases: Keep credit card use to a minimum, and don't make any major purchases when applying for a new home loan or refinance mortgage.
- Closing credit accounts: Paying off loans and credit card balances can help with boosting credit scores, but avoid closing accounts. Doing so increases your credit utilization ratio, which is calculated by dividing your outstanding balances by the total amount of credit you've been issued. For example, if you owe $3000 against a total credit line of $10,000 your credit utilization ratio is 30 percent.
Evaluating and comparing mortgage quotes is helpful for identifying a mortgage loan that work best for your circumstances. Our live database of current mortgage rates can help you find the best mortgage rates in your area.