{"id":235128,"date":"2024-06-21T19:53:23","date_gmt":"2024-06-21T19:53:23","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/06\/21\/current-mortgage-rates-fortune-recommends\/"},"modified":"2025-06-25T17:16:29","modified_gmt":"2025-06-25T17:16:29","slug":"current-mortgage-rates-fortune-recommends","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/06\/21\/current-mortgage-rates-fortune-recommends\/","title":{"rendered":"Current mortgage rates | Fortune Recommends"},"content":{"rendered":"<p> [ad_1]<br \/>\n<br \/><img decoding=\"async\" src=\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/06\/GettyImages-1270122329.jpg?w=2048\" \/><\/p>\n<p>Whether you\u2019re thinking about buying a home for the first time, buying a bigger or smaller home, or refinancing your mortgage on your existing home, you\u2019re probably keeping a close eye on current mortgage rates. Here\u2019s the most up-to-date data on a variety of types of fixed-rate mortgages in the United States, per mortgage technology and data company Optimal Blue.<\/p>\n<div>\n<h2 class=\"wp-block-heading\">Current average mortgage interest rates in the U.S. in 2024<\/h2>\n<div class=\"sc-69739a3c-0 gQkMOz\">\n<table class=\"sc-69739a3c-1 sc-69739a3c-2 bOqeqW dQJzPb\">\n<thead>\n<tr>\n<th scope=\"col\">Type of Mortgage<\/th>\n<th scope=\"col\">Current Rate<\/th>\n<th scope=\"col\">Rate Last Reported<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">30-year conforming<\/th>\n<td>6.850%<\/td>\n<td>6.877%<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">30-year jumbo<\/th>\n<td>7.289%<\/td>\n<td>7.102%<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">30-year FHA<\/th>\n<td>6.706%<\/td>\n<td>6.732%<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">30-year VA<\/th>\n<td>6.465%<\/td>\n<td>6.433%<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">30-year USDA<\/th>\n<td>6.759%<\/td>\n<td>6.709%<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">15-year conforming<\/th>\n<td>6.096%<\/td>\n<td>6.258%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<table class=\"sc-69739a3c-1 sc-69739a3c-3 bOqeqW bslUpl\">\n<tbody>\n<tr>\n<th>30-year conforming<\/th>\n<th\/><\/tr>\n<tr>\n<td>6.850%<\/td>\n<\/tr>\n<tr>\n<td>6.877%<\/td>\n<\/tr>\n<tr>\n<th>30-year jumbo<\/th>\n<th\/><\/tr>\n<tr>\n<td>7.289%<\/td>\n<\/tr>\n<tr>\n<td>7.102%<\/td>\n<\/tr>\n<tr>\n<th>30-year FHA<\/th>\n<th\/><\/tr>\n<tr>\n<td>6.706%<\/td>\n<\/tr>\n<tr>\n<td>6.732%<\/td>\n<\/tr>\n<tr>\n<th>30-year VA<\/th>\n<th\/><\/tr>\n<tr>\n<td>6.465%<\/td>\n<\/tr>\n<tr>\n<td>6.433%<\/td>\n<\/tr>\n<tr>\n<th>30-year USDA<\/th>\n<th\/><\/tr>\n<tr>\n<td>6.759%<\/td>\n<\/tr>\n<tr>\n<td>6.709%<\/td>\n<\/tr>\n<tr>\n<th>15-year conforming<\/th>\n<th\/><\/tr>\n<tr>\n<td>6.096%<\/td>\n<\/tr>\n<tr>\n<td>6.258%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>So how do mortgage rates work and why do they fluctuate so much? We\u2019ll explain that too.<\/p>\n<p><strong>In this article:<\/strong><\/p>\n<h2 class=\"wp-block-heading\" id=\"why\">Why are mortgage rates so high?<\/h2>\n<p>During 2020 and 2021, many homebuyers were able to get mortgage rates approaching or even below 3%. But with the federal government injecting money into the economy through COVID-19 pandemic aid to individuals and businesses\u2014with the aim of preventing a recession\u2014and consumers spending money at an unexpected clip, inflation hit record rates and prices soared.\u00a0<\/p>\n<p>In response, the Federal Reserve <a href=\"https:\/\/fortune.com\/recommends\/banking\/fed-rate-change-history-forecast\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/banking\/fed-rate-change-history-forecast\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">hiked its federal funds rate<\/a> 11 times between March 2022 and July 2023. To put it simply, a higher federal funds rate means it costs more for banks when they need to borrow money. Lenders accordingly raise interest rates and it becomes more expensive for consumers and businesses to borrow. Debt gets more expensive in a variety of forms, including auto loans, carrying a credit card balance, and of course, mortgages.\u00a0<\/p>\n<p>But it\u2019s an important piece of context that rates are not that different from where they were in the 1970s, 1980s, and 1990s. If anything, they\u2019re a little lower today. They\u2019re roughly on par with where they were in the early 2000s. The Federal Reserve dropped rates in 2007 and 2008 to near zero as part of the effort to revive an economy damaged by the Great Recession. While the Fed did hike rates slightly in 2015, it reversed course as the pandemic happened.<\/p>\n<p>In short, the high mortgage rates of today are a shock to consumers after more than a decade of low rates\u2014perhaps particularly to Americans in the Millennial and Generation Z demographics who came into adulthood when low rates were the norm\u2014but are not historically unusual.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"rates-go-down\">Will mortgage rates go down soon?<\/h2>\n<p>It\u2019s possible the Fed could cut interest rates before the end of 2024. However, at the most recent meeting on this topic in June, the central bank decided to keep the federal funds target rate steady. Its analysis was that unemployment was low, hiring was strong, and that inflation was beginning to ease\u2014but that the battle to get inflation back down to its target of 2% was not over.<\/p>\n<p>A release issued after the decision put it this way: \u201cThe economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.\u201d<\/p>\n<p>While mortgage rates will still fluctuate day to day with the market, it\u2019s unlikely home-shoppers will see the low rates they\u2019re hoping for until the Fed decides it\u2019s safe to lower the federal funds rate.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"mortgage-types\">Types of mortgages<\/h2>\n<p>As you begin your homebuying journey, here are some of the types of mortgages you should know about.\u00a0<\/p>\n<ul>\n<li><strong>Conventional loan. <\/strong>This is simply a mortgage from a private lender not backed by a federal government program.\u00a0<\/li>\n<li><strong>Government-backed loan. <\/strong>Working with certain lenders, the federal government insures these home loans, providing access to eligible applicants and reducing risk for the lenders in the event of the consumer defaulting on what they owe. These programs include FHA loans, VA loans, and USDA loans.\u00a0<\/li>\n<li><strong>Conforming loan. <\/strong>These are conventional loans (see above) that do not exceed the Federal Housing Finance Agency\u2019s maximum loan amount, and that meet criteria set by government-sponsored enterprises Fannie Mae and Freddie Mac. In 2024, in most of the U.S., the FHFA limit for one-unit properties is $766,550.<\/li>\n<li><strong>Jumbo loan. <\/strong>Contrast jumbo mortgages with the conforming loans just explained. A jumbo mortgage exceeds the FHFA\u2019s maximum, and while you may need this type of loan if you\u2019re planning to purchase a home with a large price tag, beware that you\u2019ll likely pay more in interest over the life of the loan.<\/li>\n<li><strong>Fixed-rate mortgage. <\/strong>With a fixed-rate mortgage, your interest rate stays the same from the time you get the loan until you pay it off. That\u2019s true whether you end up keeping the loan for its full duration, selling your home and using the proceeds to pay it off, or refinancing and taking out a new mortgage. Beware that with a fixed-rate mortgage, your monthly payments can still change, for example if your property value increases (leading to higher property taxes) or if your homeowners insurance is bundled with your mortgage payment and your insurance premium increases. With severe weather events becoming more common, insurance rates in certain regions (like Florida) have seen double-digit increases in a single year.\u00a0<\/li>\n<li><strong>Adjustable-rate mortgage. <\/strong>Unlike a fixed-rate mortgage, an adjustable-rate mortgage (ARM) has a rate tied to an index that tracks the market. As the index fluctuates, so too does your rate. Typically, these offer a low teaser rate for an initial window of time, then your rate may increase when the agreed-upon adjust periods kick in. See our analysis for whether ARMs are a good idea for more details.\u00a0<\/li>\n<\/ul>\n<h3 class=\"wp-block-heading\">What type of mortgage should you get?<\/h3>\n<p>There\u2019s no silver bullet answer to this question. The best mortgage for you is going to depend on factors such as how large a loan you need, where you intend to buy, and what you can qualify for.\u00a0<\/p>\n<p>If you\u2019re a U.S. military member or veteran, or the surviving spouse of a veteran\u2014or the spouse of a veteran who is missing in action or being held as a prisoner of war\u2014you are likely eligible for a VA home loan, which may allow you to buy a house with no money down.<\/p>\n<p>Or, if you\u2019re purchasing a home in an eligible rural area, you may qualify for a USDA loan. You can check <a href=\"https:\/\/eligibility.sc.egov.usda.gov\/eligibility\/welcomeAction.do\" target=\"_blank\" aria-label=\"Go to https:\/\/eligibility.sc.egov.usda.gov\/eligibility\/welcomeAction.do\" rel=\"noopener\" class=\"sc-80b85506-0 pUpMT\">USDA\u2019s eligibility map<\/a> as a starting point. As an example, at the time of writing, the map shows that someone looking to purchase a house in Charlotte, North Carolina would not be eligible. But someone looking to purchase a house in Gaffney, South Carolina roughly an hour\u2019s drive away might be.\u00a0<\/p>\n<p>For consumers with a credit score of at least 580, who can afford a down payment ranging from 3.5% to 10%, an FHA loan is likely to be worth considering.\u00a0<\/p>\n<p>If none of these government-backed loans are available to you, however, you may have to go with a conventional mortgage and shop around for the best rate you can find. Applying at smaller institutions, such as local credit unions, may help you get a lower rate.\u00a0<\/p>\n<p>We will advise avoiding adjustable-rate mortgages unless you are comfortable with the risk of your rate (and accordingly, your monthly mortgage payment) going up after the teaser rate expires, and are willing to put in the work to refinance to a fixed-rate mortgage later on if market conditions justify it.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"get-best-rate\">How to get the best mortgage rate you can<\/h2>\n<p>To some extent, you\u2019re at the whims of the market when mortgage shopping, but there are tangible steps you can take to secure a lower rate. Here are a steps we recommend taking:<\/p>\n<ul>\n<li><strong>Check your credit score. <\/strong>While all is not lost if you have a credit score in the 500s or low 600s, mid-600s and above is ideal. If you\u2019re not sure what your credit score is, there are numerous ways to check for free\u2014make sure you\u2019re looking at a FICO Score, as that\u2019s the model lenders typically use. Signing up for an account with the <a href=\"https:\/\/www.experian.com\/\" target=\"_blank\" aria-label=\"Go to https:\/\/www.experian.com\/\" rel=\"noopener\" class=\"sc-80b85506-0 pUpMT\">credit bureau Experian<\/a> is one easy way to get your score from a trustworthy source. If your score is low and you decide to hold off applying for a mortgage for a while, you can take steps to improve your credit such as opening a <a href=\"https:\/\/fortune.com\/recommends\/credit-cards\/the-best-secured-credit-cards\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/credit-cards\/the-best-secured-credit-cards\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">secured credit card<\/a> and using it responsibly.\u00a0<\/li>\n<li><strong>Shop around. <\/strong>Whether you work with a mortgage broker or comparison shop on your own, don\u2019t assume the institution you bank with is necessarily the best option for your mortgage. You may get a lower rate with a local credit union, for example, even if you do most of your business with a larger bank that has a national presence.\u00a0<\/li>\n<li><strong>Buy mortgage points. <\/strong>This is obviously only an option if you have the money available upfront. But if you do, and you intend to stay in your new home for several years, buying mortgage discount points can be well worth it in terms of a lower interest rate.\u00a0<\/li>\n<li><strong>Use a rate lock. <\/strong>If you\u2019re offered a favorable mortgage rate, consider initiating a lock-in that can hold it for 30 or more days. You won\u2019t reap the benefits of rates dipping if they continue to go down, but you\u2019ll have peace of mind that your rate shouldn\u2019t skyrocket.\u00a0<\/li>\n<li><strong>Refinance. <\/strong>Maybe you decided the best option was to forge ahead, even with a mortgage rate higher than you would have liked. In that case, keep an eye out for a chance to <a href=\"#refinancing\" target=\"_self\" aria-label=\"Go to #refinancing\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">refinance your mortgage<\/a> at a lower rate if the market changes.\u00a0<\/li>\n<\/ul>\n<h3 class=\"wp-block-heading\">Understanding interest rate vs. APR<\/h3>\n<p>While you may have heard interest rate and APR used interchangeably (for example that\u2019s correct when referring to credit card rates) there\u2019s an important difference in the context of mortgages. Your APR will be higher than your interest rate because it reflects the interest plus any fees and other charges.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"mortgage-points\">What are mortgage points?<\/h2>\n<p>Want to lower your mortgage rate while you\u2019re in the process of buying your soon-to-be home? Buying mortgage points, also known as discount points, offers a way to get a lower interest rate.\u00a0<\/p>\n<p>Essentially, you\u2019re paying more toward interest at closing than you would otherwise have to in exchange for having a lower rate over the length of the mortgage.<\/p>\n<p>Each point is worth 1% of the total amount of your loan. Thus, if your loan is $300,000, one point would cost you $3,000. Each discount point typically reduces your interest rate by 0.25% (though this varies by the specific lender). So, for example, using this value you\u2019d have to buy four points to knock an 8% mortgage rate down to 7%.<\/p>\n<p>You have the option to purchase points in non-round-number amounts as well, such as paying $1,375 for 1.375 points on a $100,000 mortgage\u2014or even purchasing less than a point, such as $125 for 0.125 points.<\/p>\n<p>If your mortgage meets the IRS requirements for interest payments to be <a href=\"#tax-deductible\" target=\"_self\" aria-label=\"Go to #tax-deductible\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">tax deductible<\/a>, you may be able to deduct the cost of purchasing the discount points when you file taxes\u2014as long as you\u2019re itemizing\u2014for the year you buy them, or potentially over the life of the loan.<\/p>\n<p>You pay for these points at closing, so keep in mind it\u2019s a trade-off. Can you afford higher closing costs in exchange for a lower rate over the life of the loan? Do you intend to stay in the new home for at least a few years? Then buying discount points might be the right move.\u00a0<\/p>\n<p>But, if you have less saved up to go toward closing costs, you might decide to live with a higher rate instead and plan to <a href=\"https:\/\/fortune.com\/recommends\/mortgages\/what-is-mortgage-refinancing\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/mortgages\/what-is-mortgage-refinancing\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">refinance your mortgage<\/a> if an opportunity presents.\u00a0<\/p>\n<p>If you\u2019re in the latter situation, then a <a href=\"#lender-credit\" target=\"_self\" aria-label=\"Go to #lender-credit\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">lender credit<\/a> might help you achieve homeownership. We\u2019ll explain more in a later section, but this works in essentially the reverse of mortgage points.<\/p>\n<p>Don\u2019t confuse mortgage discount points with \u201cmortgage origination points,\u201d which refers to origination fees paid to your lender\u2014something else entirely vs. discount points.<\/p>\n<p>Finally, know that a lender can cap the number of mortgage discount points you can buy.<\/p>\n<h2 class=\"wp-block-heading\" id=\"rate-factors\">Factors impacting your mortgage rate<\/h2>\n<p>There are a lot of things that go into determining your mortgage interest rate. Some of the big ones are:<\/p>\n<ol>\n<li><strong>Economic conditions. <\/strong>With inflation rising after 2020, it may be unsurprising if lenders raise rates to protect their profit margins, though that\u2019s scant comfort for prospective homebuyers.\u00a0<\/li>\n<li><strong>Lack of inventory<\/strong>. Add into that a well-documented housing shortage, and you\u2019ve got a tough situation for those seeking to move from renting to homeownership or hoping to change to a larger or smaller house to fit with lifestyle changes. In fact, this is leading many baby boomers, who otherwise might have downsized and opened up inventory, <a href=\"https:\/\/fortune.com\/2024\/05\/11\/housing-market-mortgage-rates-lock-in-effect-boomer-renovations\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/05\/11\/housing-market-mortgage-rates-lock-in-effect-boomer-renovations\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">staying in place<\/a> due to their currently-low mortgage rates.\u00a0<\/li>\n<li><strong>The Fed\u2019s actions. <\/strong>As the Federal Reserve adjusts its <a href=\"https:\/\/fortune.com\/recommends\/banking\/what-is-the-federal-funds-rate\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/banking\/what-is-the-federal-funds-rate\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">federal funds rate<\/a>, influencing the economy by making it more or less expensive to borrow money, banks tend to change their rates accordingly. If you\u2019re keeping fingers crossed for mortgage rates to go down, you\u2019re essentially hoping the Fed will cut rates soon.\u00a0<\/li>\n<li><strong>Your credit.<\/strong> Not only does it make your mortgage application more likely to be approved if you have a good to excellent credit score, but a better score typically means you\u2019ll be offered a lower rate, too.\u00a0<\/li>\n<li><strong>How much you put down. <\/strong>We\u2019ll touch on whether you actually have to save up a 20% down payment momentarily, but it\u2019s undeniable that a larger down payment can mean more favorable terms on your mortgage.\u00a0<\/li>\n<li><strong>Mortgage type and length. <\/strong>Government-backed mortgages such as FHA loans and VA loans may offer lower interest rates. Also, even if you don\u2019t qualify for a government-backed loan and simply go with a conventional mortgage from a private lender, a 15-year mortgage may offer a lower rate than a 30-year mortgage (in exchange for a higher monthly payment).\u00a0<\/li>\n<\/ol>\n<h3 class=\"wp-block-heading\">Is it mandatory to put 20% down when buying a house?<\/h3>\n<p>In short, no. While you frequently hear that you need a 20% down payment, that\u2019s more of a \u201cnice to have\u201d than an actual requirement. Typically, you will need at least a 5% down payment\u2014and there are some special cases where it can be lower or nonexistent. Specifically, FHA loans require a minimum down payment of 3.5%, while VA home loans can help those who are eligible to buy a house with no money down.\u00a0<\/p>\n<p>This is good news for aspiring homebuyers who may have felt locked out by the 20% down payment rule of thumb. For example, if buying a $250,000 house, a 20% down payment would be $50,000. And that\u2019s even before you consider the closing costs that will have to be paid out of pocket.\u00a0<\/p>\n<p>However, a larger down payment can help you get a lower interest rate on your mortgage, as well as a lower monthly payment. It can also help your offer be more competitive\u2014the typical down payment is 8% for first-time homebuyers and 19% for repeat homebuyers, according to a 2023 report from the National Association of Realtors.<\/p>\n<p>Also, know that if you take out a conventional loan with a down payment that\u2019s less than 20%, you\u2019ll be expected to purchase <a href=\"https:\/\/fortune.com\/recommends\/mortgages\/what-is-pmi\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/mortgages\/what-is-pmi\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">private mortgage insurance (PMI)<\/a> which protects the lender. This will increase your monthly payments. However, you can request that your servicer removes the PMI once you\u2019ve paid down your debt to a specified point\u2014for example, when the principal balance hits 80% of the home\u2019s original value.\u00a0\u00a0\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Help for low income, bad credit, and first-time homebuyers<\/h3>\n<p>Many of the government-backed mortgage types outlined earlier in this article are worth considering if you have low income, bad credit, or are a first-time homebuyer. These include FHA loans, <a href=\"https:\/\/fortune.com\/recommends\/mortgages\/va-loans-mortgage-guide\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/mortgages\/va-loans-mortgage-guide\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">VA loans<\/a>, and USDA loans.\u00a0<\/p>\n<p>With the federal government stepping in to mitigate risk for approved lenders, these loans may be more accessible to people with credit scores in the 500s or low 600s. Contrast that with a typical mortgage from a private lender without government backing, which will generally require applicants to have a mid-600s credit score or higher. They may also offer access to lower down payments and more affordable interest rates.\u00a0<\/p>\n<p>See our analysis of what <a href=\"#mortgage-types\" target=\"_self\" aria-label=\"Go to #mortgage-types\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">type of mortgage<\/a> might be best for you for more details on these types of home loans and who can qualify.\u00a0<\/p>\n<p>There are also programs specifically targeted at offering first-time homebuyers down payment assistance. These vary by location, but typically have income restrictions and length of residence requirements.\u00a0<\/p>\n<p>For example, first-time homebuyers in Austin, Texas may qualify for down payment loan assistance of up to $40,000. Requirements include the purchase of a single-family home or condominium in Austin\u2019s full-purpose city limits and that applicants are at or below 80% median family income ($78,250 per year for two people as of this writing).<\/p>\n<p>If this is all a little overwhelming, you might benefit from working with a HUD-approved counseling agency. HUD is the U.S. Department of Housing and Urban Development\u2014and counselors with this training can help with topics such as understanding what documents you\u2019ll need to provide to a mortgage lender and identifying local resources you may be able to use. You may be able to work with a HUD-approved counselor at no cost.\u00a0<\/p>\n<p>To find a housing counseling agency with HUD certification, you\u2019ve got a few options:<\/p>\n<ul>\n<li>Use the Find a Counselor tool provided by the Consumer Financial Protection Bureau.\u00a0<\/li>\n<li>Call the CFPB by phone at 855-411-2372 and they can connect you to a counselor.<\/li>\n<li>Call the HOPE Hotline, open 24\/7, by phone at 888-995-4673.\u00a0\u00a0<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\" id=\"closing-costs\">What are closing costs and how do they work?<\/h2>\n<p>If you thought the down payment was the only thing you had to save up for when planning to buy a house, brace yourself. You\u2019ll also be responsible for closing costs out of pocket. Generally, buyers are responsible for the bulk of closing costs, though sometimes a seller may make concessions and agree to pay certain items in the interest of selling the house quickly.\u00a0<\/p>\n<p>Closing costs typically run about 3% to 5% of the amount of the loan, and can include expenses such as appraisals, title insurance, and more. We\u2019ll dive into specifics momentarily, but first, let\u2019s note that mortgage points and lender credits play an important role in determining how much you owe at closing.\u00a0<\/p>\n<p>Mortgage discount points, as explained earlier, lower your interest rate but require you to pay more upfront\u2014lender credits do the reverse, letting you close for less in exchange for a higher rate. Here\u2019s how.<\/p>\n<h3 class=\"wp-block-heading\" id=\"lender-credit\">How lender credits are calculated<\/h3>\n<p>It\u2019s easy to understand lender credits as \u201cnegative points.\u201d You should get a loan estimate and closing disclosure as part of the homebuying process, and lender credits should be reflected there\u2014a $3,000 credit on a $300,000 mortgage might be shown as one negative point, for instance.\u00a0<\/p>\n<p>How much your interest rate increases for each negative point is going to vary by lender, as well as by factors such as the type of mortgage you\u2019re taking out.<\/p>\n<p>When discussing lender credits with the bank or credit union you\u2019re working with for your mortgage, make sure everyone is using the same terminology. Some institutions may refer to \u201ccredits\u201d that are not connected to your interest rate.\u00a0<\/p>\n<p>Now, on to some of the other elements making up your closing costs.\u00a0\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Loan origination fees<\/h3>\n<p>The saying goes that nothing in life is free, and that certainly applies to taking out a mortgage. The loan origination fees cover processing and underwriting, and generally cost up to 1% of the mortgage amount.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Appraisal and survey fees<\/h3>\n<p>This is fairly self-explanatory. The buyer is usually responsible for paying for the appraisal, which confirms the value of the house before the lender agrees to fund the mortgage. While the cost of an appraisal will depend on factors such as location, expect it to run $300 or more.\u00a0\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Title insurance<\/h3>\n<p>Title insurance makes sure the house can legally be transferred to the buyer, and that there aren\u2019t any issues such as liens or unpaid taxes that would complicate things.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Homeowners insurance and HOA fees<\/h3>\n<p>You probably knew that you\u2019d need to have homeowners insurance, with coverage generally including situations like fire and theft\u2014as well as potentially covering medical expenses if someone gets hurt on your property. But did you know you likely have to pay the first year upfront?\u00a0<\/p>\n<p>And, if your new place is within a homeowners\u2019 association, your first month of HOA dues will likely need to be paid at closing too. These dues often go toward things such as maintaining pools, clubhouses, and private roads.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Private mortgage insurance<\/h3>\n<p>PMI is standard when you make a down payment of less than 20%. While the cost for PMI varies based on numerous factors including your credit score and the insurer, a Freddie Mac estimate puts it at roughly $30 to $150 per month for every $100,000 you borrow.<\/p>\n<p>If you have an FHA home loan, you\u2019ll have something very similar but under a different name\u2014a mortgage insurance premium (MIP).\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Mortgage points<\/h3>\n<p>You can buy mortgage discount points worth 1% of the amount of your loan in exchange for a lower interest rate. However much you decide to put up for points will be due at closing. See our explanation of how mortgage points work for a more in-depth examination.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Property tax<\/h3>\n<p>Most of the closing costs we\u2019ve addressed so far are not tax deductible. Property tax and mortgage points are two that likely are (but only if you\u2019re itemizing). It\u2019s usual to pay six months of advance property tax with your closing costs.\u00a0\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Attorney fees<\/h3>\n<p>This will depend on whether your state requires a real estate attorney to draft paperwork for the seller to be able to transfer the property title to you, the buyer.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Miscellaneous fees<\/h3>\n<p>Expect a variety of smaller fees, such as the cost of registering your home purchase with the appropriate local government body and a charge for your credit report.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"refinancing\">When and how to refinance an existing mortgage<\/h2>\n<p>Maybe you\u2019re already a homeowner, and once in a while you think to yourself, \u201cGetting that first mortgage was so much fun. I really wish I could do it again, but darn it, I\u2019m just not ready to buy a new house.\u201d If so, you\u2019re in luck\u2014refinancing is a fancy term for taking out a new mortgage to replace your existing one on your current house.\u00a0<\/p>\n<p>Jokes aside, there are some pretty obvious cases where it\u2019s worth the effort to refinance. Maybe the market has changed and rates have gone down, or perhaps your home value has gone up while you\u2019ve been paying down debt and you want to turn the difference into cash.\u00a0<\/p>\n<p>Here\u2019s when you may want to refinance and how it works to do so. Note, some mortgages allow you to refinance almost immediately while others might make you wait up to 24 months, so check with your lender about your specific loan offer before signing.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">To get a better rate<\/h3>\n<p>If you bought your house after the Fed started raising rates in March 2022, you might be paying an interest rate in the vicinity of 6%, 7%, or 8% on your mortgage, judging by the national average. Should the Fed end up cutting rates in the future, you may have an opportunity to refinance at a lower rate. Even a difference of one percentage point can save you a lot of dough\u2014potentially in the vicinity of a couple grand per year, depending on your loan specifics.\u00a0<\/p>\n<p>Or, perhaps you currently have an adjustable-rate mortgage and are tired of the rate fluctuating each time the adjustment period comes around. Even with caps on how much your rate can increase in certain cases or over the life of the loan, maybe you didn\u2019t fully realize how much your monthly payment could fluctuate\u2014or maybe your financial situation has changed, such as a reduction in income. Refinancing to a fixed-rate mortgage could give you peace of mind.<\/p>\n<p>We should mention as a caveat to the above that your mortgage payment can still increase or decrease with a fixed-rate mortgage, for example if your property value goes up and property taxes increase accordingly.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">When you need funds<\/h3>\n<p>Quite simply, a cash-out refinance lets you take out a new mortgage to pay off your old one and receive the difference between the new loan (your home\u2019s current value) and what was left on the old loan by check or wire transfer.\u00a0<\/p>\n<p>Of course, the downside to this is that you\u2019re taking on a new, bigger loan in exchange for immediate cash. And, depending on the term of your new mortgage, you could essentially be starting over on the repayment period with 30 years ahead of you to pay off your home.<\/p>\n<p>But, if you\u2019re OK accepting the above and you have equity in your home, a cash-out refinance can give you access to money that can be used for almost any purpose. Per an analysis of data spanning 2013 to 2023, the median amount homeowners pocket through cash-out refinances is $37,131, according to the Consumer Financial Protection Bureau.\u00a0\u00a0\u00a0<\/p>\n<h3 class=\"wp-block-heading\">How it works<\/h3>\n<p>Refinancing is more or less like what you went through the first time you took out a mortgage when you bought your home. It\u2019s generally not free\u2014closing costs on refinances average $5,000, according to Freddie Mac.\u00a0<\/p>\n<p>As with your first mortgage, you can choose to comparison shop on your own or use a mortgage broker when refinancing. You also have the chance to buy mortgage discount points to lower your interest rate.\u00a0<\/p>\n<p>Be skeptical of lenders advertising a \u201cno-cost refinance\u201d as this likely means they will roll closing costs into the loan amount and charge you a higher interest rate.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"historical-trends\">Historical mortgage rate trends<\/h2>\n<p>We spent time analyzing data from the Federal Reserve Bank of St. Louis (FRED) to satisfy your curiosity about how mortgage rates today compare with historical rates.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">30-year fixed-rate mortgage highs by decade<\/h3>\n<div class=\"sc-69739a3c-0 gQkMOz\">\n<table class=\"sc-69739a3c-1 sc-69739a3c-2 bOqeqW dQJzPb\">\n<thead>\n<tr>\n<th scope=\"col\">Decade<\/th>\n<th scope=\"col\">Rate High<\/th>\n<th scope=\"col\">Specific Year<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">2020s<\/th>\n<td>7.79%<\/td>\n<td>2023<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">2010s<\/th>\n<td>5.21%<\/td>\n<td>2010<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">2000s<\/th>\n<td>8.64%<\/td>\n<td>2000<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">1990s<\/th>\n<td>10.67%<\/td>\n<td>1990<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">1980s<\/th>\n<td>18.63%<\/td>\n<td>1981<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">1970s<\/th>\n<td>12.90%<\/td>\n<td>1979<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<table class=\"sc-69739a3c-1 sc-69739a3c-3 bOqeqW bslUpl\">\n<tbody>\n<tr>\n<th>2020s<\/th>\n<th\/><\/tr>\n<tr>\n<td>7.79%<\/td>\n<\/tr>\n<tr>\n<td>2023<\/td>\n<\/tr>\n<tr>\n<th>2010s<\/th>\n<th\/><\/tr>\n<tr>\n<td>5.21%<\/td>\n<\/tr>\n<tr>\n<td>2010<\/td>\n<\/tr>\n<tr>\n<th>2000s<\/th>\n<th\/><\/tr>\n<tr>\n<td>8.64%<\/td>\n<\/tr>\n<tr>\n<td>2000<\/td>\n<\/tr>\n<tr>\n<th>1990s<\/th>\n<th\/><\/tr>\n<tr>\n<td>10.67%<\/td>\n<\/tr>\n<tr>\n<td>1990<\/td>\n<\/tr>\n<tr>\n<th>1980s<\/th>\n<th\/><\/tr>\n<tr>\n<td>18.63%<\/td>\n<\/tr>\n<tr>\n<td>1981<\/td>\n<\/tr>\n<tr>\n<th>1970s<\/th>\n<th\/><\/tr>\n<tr>\n<td>12.90%<\/td>\n<\/tr>\n<tr>\n<td>1979<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>A note regarding mortgage rate data available for the 1970s: FRED data on 30-year fixed-rate mortgages starts in April 1971, so 1970 and part of 1971 are not factored into this analysis.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">15-year fixed-rate mortgage highs by decade<\/h3>\n<div class=\"sc-69739a3c-0 gQkMOz\">\n<table class=\"sc-69739a3c-1 sc-69739a3c-2 bOqeqW dQJzPb\">\n<thead>\n<tr>\n<th scope=\"col\">Decade<\/th>\n<th scope=\"col\">Rate High<\/th>\n<th scope=\"col\">Specific Year<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">2020s<\/th>\n<td>7.03%<\/td>\n<td>2023<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">2010s<\/th>\n<td>4.50%<\/td>\n<td>2010<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">2000s<\/th>\n<td>8.31%<\/td>\n<td>2000<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">1990s<\/th>\n<td>8.89%<\/td>\n<td>1994<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<table class=\"sc-69739a3c-1 sc-69739a3c-3 bOqeqW bslUpl\">\n<tbody>\n<tr>\n<th>2020s<\/th>\n<th\/><\/tr>\n<tr>\n<td>7.03%<\/td>\n<\/tr>\n<tr>\n<td>2023<\/td>\n<\/tr>\n<tr>\n<th>2010s<\/th>\n<th\/><\/tr>\n<tr>\n<td>4.50%<\/td>\n<\/tr>\n<tr>\n<td>2010<\/td>\n<\/tr>\n<tr>\n<th>2000s<\/th>\n<th\/><\/tr>\n<tr>\n<td>8.31%<\/td>\n<\/tr>\n<tr>\n<td>2000<\/td>\n<\/tr>\n<tr>\n<th>1990s<\/th>\n<th\/><\/tr>\n<tr>\n<td>8.89%<\/td>\n<\/tr>\n<tr>\n<td>1994<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>A note regarding mortgage rate data available for the 1990s: FRED data on 15-year fixed-rate mortgages starts in August 1991, so 1990 and part of 1991 are not factored into this analysis.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Chart of 30-year fixed-rate mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkJC&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h3 class=\"wp-block-heading\">Chart of 15-year fixed-rate mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkJG&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h3 class=\"wp-block-heading\">Chart of 30-year conforming mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkJJ&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h3 class=\"wp-block-heading\">Chart of 30-year fixed-rate jumbo mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkJU&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h3 class=\"wp-block-heading\">Chart of 30-year VA mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkK8&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h3 class=\"wp-block-heading\">Chart of 30-year FHA mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkKc&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h3 class=\"wp-block-heading\">Chart of 30-year USDA mortgage trends<\/h3>\n<p><iframe class=\"\" frameborder=\"0\" height=\"525px\" loading=\"lazy\" scrolling=\"no\" src=\"https:\/\/fred.stlouisfed.org\/graph\/graph-landing.php?g=1pkKh&amp;width=670&amp;height=475\" style=\"border:none\" width=\"670px\"><\/iframe><\/p>\n<h2 class=\"wp-block-heading\" id=\"home-equity\">What is home equity and how do you leverage it?<\/h2>\n<p>Put simply, home equity is the difference between what your home is worth and what you owe on it. You can leverage this to borrow money for purposes like home improvement projects, <a href=\"https:\/\/fortune.com\/recommends\/mortgages\/use-home-equity-loan-to-consolidate-debt\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/mortgages\/use-home-equity-loan-to-consolidate-debt\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">paying off other debt<\/a>, or even buying a vacation house or an investment property. Generally speaking, the funds are not restricted to any specific use.\u00a0\u00a0<\/p>\n<p>There are two main ways of borrowing against the equity you\u2019ve built up\u2014a home equity loan or a home equity line of credit, with the latter commonly abbreviated as HELOC.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">How home equity loans and HELOCs work<\/h3>\n<p>A home equity loan is also known as a second mortgage. It does not necessarily need to be from the same lender as your original mortgage is with. You take out a home equity loan for a set amount and with a set repayment period (often five to 20 years, but it can be as long as 30).\u00a0<\/p>\n<p>By contrast, a HELOC is a revolving line of credit, meaning you can borrow as needed and repay as you go. There\u2019s an initial <a href=\"https:\/\/fortune.com\/recommends\/mortgages\/what-to-know-before-your-heloc-draw-period-ends\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/mortgages\/what-to-know-before-your-heloc-draw-period-ends\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">draw period<\/a>, usually five to 10 years, where you can pay just the interest accrued. After that, you must make payments toward both principal and interest. As with a home equity loan, there\u2019s no requirement to go to your original mortgage lender for your HELOC.<\/p>\n<p>We\u2019ll look at some pros and cons of both methods for leveraging your home equity and help you assess if either might be right for you.\u00a0\u00a0\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Pros and cons of a home equity loan<\/h3>\n<div class=\"pros_cons\">\n<div>\n<h3>Pros<\/h3>\n<ul>\n<li>Fixed interest rate<\/li>\n<li>Set repayment timeline<\/li>\n<li>Comparatively lower interest rate vs. unsecured loans<\/li>\n<li>Might be partially tax deductible<\/li>\n<\/ul>\n<\/div>\n<div>\n<h3>Cons<\/h3>\n<ul>\n<li>Secured by your home<\/li>\n<li>Requires good credit<\/li>\n<li>May incur closing costs<\/li>\n<li>Less flexibility<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h3 class=\"wp-block-heading\">Pros and cons of a HELOC<\/h3>\n<div class=\"pros_cons\">\n<div>\n<h3>Pros<\/h3>\n<ul>\n<li>Flexibility to borrow as you need funds<\/li>\n<li>Comparatively lower interest rates vs. unsecured loans<\/li>\n<li>Might be partially tax deductible<\/li>\n<\/ul>\n<\/div>\n<div>\n<h3>Cons<\/h3>\n<ul>\n<li>Secured by your home<\/li>\n<li>Requires good credit<\/li>\n<li>May incur closing costs<\/li>\n<li>Variable interest rate<\/li>\n<li>May charge a prepayment penalty<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h3 class=\"wp-block-heading\">Is using home equity a good idea?<\/h3>\n<p>First, be very aware of the fact that both home equity loans and HELOCs are secured by your home as collateral. That means if you default, your home could be foreclosed upon. The chance of losing one\u2019s home is never a matter to take lightly, even if your finances are in great shape.<\/p>\n<p>If you understand and accept that risk, and have a budget in place for repaying your loan or line of credit reliably, you may decide it\u2019s worth moving forward. After all, <a href=\"https:\/\/fortune.com\/recommends\/mortgages\/reasons-to-use-home-equity\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/mortgages\/reasons-to-use-home-equity\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">using home equity<\/a> can likely get you a lower interest rate than you\u2019d get with an unsecured personal loan. You may also have a longer window of time to repay what you owe, compared with a personal loan that might offer a three-to-five-year repayment schedule.\u00a0<\/p>\n<p>Depending on what you plan to use the funds for, even though the initial loan or HELOC will decrease your equity, you might end up better off in the long run\u2014some home improvement projects, such as remodeling the kitchen, basement, or attic, may significantly increase the resale value.\u00a0<\/p>\n<p>Note that you might need to get an appraisal done before receiving approval for a home equity loan or HELOC. You\u2019ll also need to have at least 15% to 20% equity in your home to be able to secure one of these products. And, while this might be stating the obvious, be aware you\u2019ll need to provide proof of homeowners insurance.<\/p>\n<p>If after reading all this you don\u2019t feel like a home equity loan or HELOC is right for you, another option could be a cash-out refinance\u2014where you take out a new mortgage to pay the old one off. Doing so essentially lets you pocket the difference between the new loan you took out (for your home\u2019s current value) and what was left on the original mortgage. See our section on <a href=\"#refinancing\" target=\"_self\" aria-label=\"Go to #refinancing\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">refinancing<\/a> for more on when this might make sense.\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"FAQs\">Frequently asked questions<\/h2>\n<h3 class=\"wp-block-heading\">Who can get an FHA mortgage?<\/h3>\n<p>To be a good candidate for an FHA loan, you\u2019ll generally need a credit score of 580 or higher, no history of bankruptcy in the past two years or foreclosure in the past three years, a debt-to-income ratio less than 43%, steady income and proof of employment, and purchasing a home that you will use as your main place of residence. You\u2019ll also need to be able to make a down payment ranging from 3.5% to 10% (depending on your credit) and cover closing costs.\u00a0<\/p>\n<p>A quick note of explanation here\u2014to calculate your debt-to-income ratio, you need to know your gross monthly income before taxes and any other deductions come out of your paycheck, plus the total amount of any debt payments you have to make each month. Divide your debt payment amount by your gross monthly income and there\u2019s your DTI. For example, someone whose income is $5,000 and whose monthly debt payment is $1,500 has a DTI of 30%.<\/p>\n<p>While FHA loans can be a strong option for first-time homebuyers, you can still apply for an FHA mortgage even if you\u2019re a current homeowner or have owned a house in the past.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Is an adjustable-rate mortgage a good idea?<\/h3>\n<p>If you are uncomfortable with uncertainty, an adjustable-rate mortgage is probably not a good idea for you. ARMs offer an attractive low teaser rate for an initial period, then generally the rate goes up. Note that increases are based on an index, which tracks general market conditions, and a margin\u2014the number of percentage points the lender can tack onto the index to turn a profit.\u00a0<\/p>\n<p>It\u2019s also important to understand how often your rate can be adjusted. ARMs are referred to with a combination of numbers that spell out the length of your teaser rate and the frequency of subsequent adjustments. For example, if you have a 5\/6m ARM, that means your intro rate should stay the same for five years, after which your lender can adjust your rate every six months.\u00a0<\/p>\n<p>The Consumer Financial Protection Bureau (CFPB) provides a <a href=\"https:\/\/files.consumerfinance.gov\/f\/documents\/cfpb_charm_booklet.pdf\" target=\"_blank\" aria-label=\"Go to https:\/\/files.consumerfinance.gov\/f\/documents\/cfpb_charm_booklet.pdf\" rel=\"noopener\" class=\"sc-80b85506-0 pUpMT\">Consumer Handbook on Adjustable Rate Mortgages<\/a>, catchily nicknamed the CHARM booklet.<\/p>\n<p>If you do proceed with an ARM, you may wish to keep an eye out when your intro rate expires for an opportunity to refinance to a fixed-rate mortgage. Just know that while you can refinance some mortgages almost immediately, others might make you wait for up to two years. Ask about the fine print before you sign.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">What\u2019s a mortgage rate lock?<\/h3>\n<p>A mortgage rate lock, or lock-in, allows you to temporarily freeze a rate you\u2019ve been offered and protect it from the daily fluctuations that buffet mortgage rates. These typically last for 30, 45, or 60 days, so keep in mind you\u2019ll need to move quickly once you initiate a rate lock. If your initial lock doesn\u2019t provide enough time to seal the deal, you may be able to extend it\u2014for a cost.\u00a0<\/p>\n<p>The downside to a rate lock is that if mortgage rates dip after you\u2019ve locked in your rate, you won\u2019t benefit from the decrease. Think carefully what level of uncertainty you can accept.<\/p>\n<p>Lastly, know that your mortgage rate can still change in certain circumstances even if you\u2019ve locked it in. Maybe the house appraises at a vastly different value than expected. Or perhaps you miss a payment on an existing credit account and your credit score goes down. A rate lock can provide some peace of mind in a turbulent market, but it is not an absolute guarantee.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Can I get a mortgage with bad credit?<\/h3>\n<p>The answer here is \u201cmaybe.\u201d With a credit score in the mid-600s, you have a chance at getting approved for a conventional mortgage from a private lender or a USDA-backed loan. If your credit score is 500 or higher, you may be able to get an FHA loan, so long as you can put down a 10% down payment. With a credit score below 500, your application for any type of mortgage is likely to be rejected. Take a look at our tips on <a href=\"https:\/\/fortune.com\/recommends\/credit-cards\/how-to-build-and-improve-your-credit-score\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/recommends\/credit-cards\/how-to-build-and-improve-your-credit-score\/\" class=\"sc-80b85506-0 pUpMT\" rel=\"noopener\">how to improve your credit<\/a> in this case.<\/p>\n<h3 class=\"wp-block-heading\">Can I get a mortgage on a mobile home?<\/h3>\n<p>You may be able to get a mortgage to purchase a mobile home (or more properly, a manufactured home, if built after June 15, 1976). But some lenders will consider such properties as greater risk than traditional houses and will avoid them accordingly, so you might have to shop around a bit. Also, know that a manufactured home should be atop a permanent base.<\/p>\n<h3 class=\"wp-block-heading\">Can I get a mortgage to build a house?<\/h3>\n<p>If you already have the land where you\u2019re planning to build your new home, what you need is a construction loan. And, if you haven\u2019t purchased the land yet, what you need is a land loan.\u00a0<\/p>\n<p>These types of loans differ from home loans in a few ways. For example, both construction loans and land loans tend to have higher interest rates than home loans. They also have different durations, with a construction loan period generally only lasting a year, while a land loan repayment period may extend up to 20 years. Contrast these with a mortgage to buy a house, where a 30-year repayment period is standard.\u00a0<\/p>\n<p>Also, know that construction loans are likely to have variable interest rates which fluctuate based on an index, whereas fixed-rate home loans are more common.\u00a0<\/p>\n<p>You may be able to get a construction-to-permanent loan, which lets you convert the loan into a mortgage after your house is up.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Can I get a mortgage on a modular home?<\/h3>\n<p>If the modular home has already been constructed, then yes, a prospective homebuyer can get a mortgage for it just like for a stick-built home. But if the modular home has not yet been put together, a construction loan would be the appropriate type of funding.\u00a0<\/p>\n<h3 class=\"wp-block-heading\">Do I need a mortgage broker?<\/h3>\n<p>A mortgage broker essentially helps you comparison shop, getting quotes from multiple lenders based on your financial situation and needs. This can be helpful if you feel overwhelmed by the complexities of the homebuying process\u2014and since lenders may have requirements such as a certain minimum credit score or debt-to-income ratio cutoff, the broker can connect you with a lender likely to work for you.\u00a0<\/p>\n<p>But, of course, it\u2019s not free. It\u2019s typical for the broker to be paid a commission by the lender based on a percentage of the mortgage amount (though there can sometimes be other arrangements, such as a flat fee). If you\u2019re considering engaging a broker\u2019s services, ask them to explain the payment structure before you commit to working with them.\u00a0<\/p>\n<h3 class=\"wp-block-heading\" id=\"tax-deductible\">Are mortgage payments tax deductible?\u00a0<\/h3>\n<p>Yes, if your mortgage meets certain IRS requirements, the interest portion of your mortgage payments should be tax deductible. The loan must be secured by your home, and you need to have used the money from the loan to purchase or improve your main residence\u2014with an allowance for a second home as long as that one too is used for personal purposes.\u00a0<\/p>\n<p>If you purchased mortgage discount points when you took out your mortgage, those are usually tax deductible for the year you bought the home, but not thereafter.\u00a0<\/p>\n<p>There are two important caveats to all this. First, there\u2019s a cap on how much you can deduct. You\u2019re limited to a principal amount of no more than $750,000 for loans originated in April 2018 or later (half that amount if you\u2019re married but file separately). And second, you can only deduct mortgage interest and points if you itemize.\u00a0<\/p>\n<p>That last bit is key, because many homeowners may actually do better taking the standard deduction than trying to itemize and deduct mortgage interest on their taxes. The standard deduction as of 2024 is $29,200 for married couples filing jointly and $14,600 for singles and married folks filing separately. Those are big numbers to beat with itemized deductions.\u00a0<\/p>\n<\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/fortune.com\/recommends\/mortgages\/current-mortgage-rates\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Whether you\u2019re thinking about buying a home for the first time, buying a bigger or smaller home, or refinancing your mortgage on your existing<\/p>\n","protected":false},"author":1,"featured_media":235129,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[149],"tags":[],"_links":{"self":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/posts\/235128"}],"collection":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/comments?post=235128"}],"version-history":[{"count":0,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/posts\/235128\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/media\/235129"}],"wp:attachment":[{"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/media?parent=235128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/categories?post=235128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/michigandigitalnews.com\/index.php\/wp-json\/wp\/v2\/tags?post=235128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}