30-Year Fixed Mortgage Rate Hits 7% Due to Inflation, But Shopping Around Can Save You Money

Mortgage rates are constantly changing due to economic conditions, particularly inflation. As of May 10, 2024, the average interest rate for a 30-year fixed-rate mortgage is 7.000%, while the interest rate for a 15-year fixed-rate mortgage is 6.375%. These rates are higher than they were yesterday, as inflation continues to prove stubborn, contributing to higher mortgage rates. Lenders generally charge higher interest rates for higher-risk borrowers, but other factors such as credit score, debt-to-income ratio, down payment, loan amount, and repayment term can also impact the rate. To find the best mortgage rate, it’s recommended to compare rates from multiple lenders using a secure website like Credible, which won’t affect your credit score. It’s also important to consider the economic and personal factors that can impact the rate, as well as the lender chosen. Benefits of getting a mortgage include building wealth through homeownership and potentially saving money through tax deductions, while drawbacks include the risk of foreclosure and being tied to a house for an extended period. To qualify for a mortgage, requirements vary by lender, but steps typically involve submitting necessary documentation, providing evidence of employment and income, and undergoing a credit check. Refinancing a mortgage allows for trading the current loan for a new one, and can be beneficial for paying off debt, funding renovations, or covering emergencies. Home equity loans and home equity lines of credit (HELOCs) both allow borrowing against a home’s equity, but differ in structure: a home equity loan provides a lump sum payment, while a HELOC is a revolving line of credit. Closing costs, including attorney fees, home appraisal fees, origination fees, and application fees, must be paid before receiving a loan. To ensure the best mortgage rate, it’s suggested to use a securing website like Credible to compare multiple lenders and view prequalified rates quickly. Additionally, paying mortgage points upfront can result in a lower overall interest rate, while rate locks guarantee a specific rate for a set period of time during the homebuying process.