Today, Monday, January 6, 2020, 30-year mortgage rates fell 1 basis points to 4.07% today. 15-year rates fell 2 basis points to 3.60% and 5/1 ARM rates fell 2 basis points to 4.09%. FHA rates remained unchanged at 4.20%. The average annual percentage rate (APR) fell by 6 basis points from last week.
Today’s interest rates are the daily average rates advertised by national lenders and does not represent the rates of our lending partners. Rates are determined by several factors including your credit score and your rate could be higher.
Weekly Mortgage Rate Trends
|Weekly||30-year fixed rate||15-year fixed rate||5/1 ARM||FHA 30-year fixed|
What’s Affecting Rates Today
The stock market has hit new highs in the Dow (27,000) and SP500 (3,030). The Fed rate cut decision is today where they are expected to announce a quarter point rate cut at 2pm EST. The market is in a wait and see mode leading up until the decision. We could see a large move in either direction depending on how hawkish or dovish the Fed chair’s comments are.
Comparing Mortgage Rates
When it comes to a mortgage where the loan amount is several hundred thousand dollars. Even just a quarter point difference in the mortgage rate can add up to tens of thousands of dollars over the course of a mortgage. It’s extremely important that you get at rate quotes from at least 3 different lenders before moving forward with a mortgage loan.
Comparing loan offers from multiple lenders is easy with The Lenders Network. Complete a short form and we will send your information to up to 4 different lenders so you can make sure you’re getting the best deal on your loan.
Whether you’re a first-time homebuyer, buying a second home, or want to refinance The Lenders Network can help you get the lowest rate on your mortgage.
Annual Percentage Rate APR
The annual percentage rate, or APR is the total cost of the loan including interest, closing costs, discount points, and other fees expressed as a percentage, this is why the APR is a little higher than the mortgage rate. Using the APR you can compare loans with different rates and costs to see which loan is really the cheapest.
Factors Affecting Your Interest Rate
Mortgage rates are determined by several different factors including a borrowers credit score, loan term, loan amount, down payment, and debt-to-income ratio.
Credit Score – A borrowers credit score is the largest factor in determining the mortgage rate on a mortgage loan. The higher the credit score the lower the rate will be.
Loan Term – The longer the loan term the higher the rate will be. A 30-year mortgage loan will have a higher interest rate than a shorter loan term such as a 15-year fixed-rate loan. Adjustable-rate mortgages (ARM) will have a low rate for a fixed period of time, which will be adjusted afterwards.
Loan Amount – The mortgage rate is typically higher on a loan with a particularly small or large loan amount. A lender issuing a small loan amount of less than $100,000 will charge a higher rate to give them more incentive to make the loan. A large loan amount, if defaulted on represents significant risk to a lender which in turn results in a higher rate.
Down Payment – Studies have shown that borrowers who put down a significant amount of money are less likely to default on a mortgage. The lower a down payment, the higher the mortgage rate will be. If you can put at least 20% down on a loan you will qualify for the best possible rate on that loan.
Debt-to-Income Ratio – Debt-to-income (DTI) ratio is the amount of your income to goes towards debt payments. The maximum DTI ratio for most lenders is around 43%, but a lower DTI ratio represents a reduced risk to the lender resulting in a lower rate.
Discount points are a form of upfront interest. A lender allows you to buy points upfront in order to lower the mortgage rate. 1 point is equal to 1% of the loan amount.
Other Costs Associated with a Mortgage
There are many costs associated with a mortgage loan besides just the principle and interest. Here are the additional costs a homeowner can expect.
PMI – Mortgage insurance is required on all mortgage loans with a loan-to-value ratio of more than 80%. PMI insures the mortgage itself in the event a borrower defaults on the loan the lender will be reimbursed by the insurer.
The mortgage insurance rate will depend on the type of loan you’re getting. Most conventional loans have a PMI rate around .50%, while FHA loans are between .80%-1%.
Homeowners Insurance – In addition to mortgage insurance you will be required to have homeowners insurance which insures the property itself. It covers things like hail and foundation issues, you can expect to pay about $1,000 per year.
Property Taxes – Property taxes are charged by your local county and will vary depending on the state/county you reside in. These taxes add up to thousands of dollars per year, but you will pay a portion each month into your escrow account so your lender can make these payments on your behalf once a year.
The Lenders Network has the largest network of mortgage lenders that specialize in home loans for borrowers with all types of credit scores. We will match you will the best lender based on your specific situation.