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Current Mortgage Rates
What Is a Mortgage?
A mortgage is a loan used to purchase a home or refinance an existing home loan. The property itself serves as collateral, meaning the lender has a legal claim against the home until the loan is paid off. Mortgages are typically repaid over 15 to 30 years through monthly payments that include principal, interest, and often taxes and insurance.
For most people, a mortgage is the largest financial commitment they'll ever make, which is why understanding how rates, terms, and loan types work can have a meaningful impact on what you pay over the life of the loan.
How Mortgage Rates Work
Mortgage rates are influenced by a mix of broader economic factors and your personal financial profile. On the market side, rates move in response to inflation, Federal Reserve policy, and conditions in the bond market, particularly yields on the 10-year Treasury. When those yields rise, mortgage rates typically follow.
On the personal side, the rate you're offered depends on factors like your credit score, down payment, loan amount, loan term, property type, and location. Two borrowers applying on the same day can receive different rates based on their financial profiles.
There are two main rate structures to understand:
- Fixed-rate mortgages keep the same interest rate for the entire life of the loan. Your monthly principal and interest payment stays predictable, which makes budgeting easier. The most common terms are 15-year and 30-year fixed loans.
- Adjustable-rate mortgages (ARMs) start with a fixed rate for an initial period, typically 5, 7, or 10 years, and then adjust periodically based on market rates. ARMs often start with a lower rate than a comparable fixed loan, but your payment can rise or fall after the fixed period ends.
Purchase vs. Refinance
Mortgages generally fall into two categories:
- Purchase loans are used to buy a home. The loan amount, down payment, and property value all factor into what you qualify for. Most purchase loans require a down payment between 3% and 20% depending on the loan type and lender.
- Refinance loans replace an existing mortgage with a new one, typically to secure a lower rate, change the loan term, switch from an ARM to a fixed rate, or tap into home equity through a cash-out refinance. Whether a refinance makes sense depends on current rates, how long you plan to stay in the home, and the costs involved in closing a new loan.
What to Look For When Comparing Offers
Not all mortgage offers are equivalent, even when the headline rate looks similar. Here are the key factors worth evaluating:
- APR vs. Interest Rate. The interest rate is what the lender charges on the loan balance. The APR (Annual Percentage Rate) includes the interest rate plus certain fees and costs, expressed as a yearly percentage. APR is generally a more complete measure of what the loan actually costs you.
- Points and Fees. Some lenders offer lower rates in exchange for discount points, which are upfront fees paid at closing to reduce your rate. Other lenders may have higher closing costs or origination fees. Always look at the total cost of the loan, not just the rate.
- Loan Term. Shorter terms (like 15 years) typically come with lower rates and less total interest paid, but higher monthly payments. Longer terms (like 30 years) offer lower monthly payments but more total interest over the life of the loan.
- Loan Type. Conventional, FHA, VA, and USDA loans each have different requirements for credit, down payment, and property type. The right loan type depends on your financial profile and the home you're buying.
- Estimated Monthly Payment. A useful at-a-glance comparison, but be sure you understand what's included. Some estimates show only principal and interest, while others include taxes, insurance, and mortgage insurance (PMI).