Mortgage rates have fallen slightly. What to know to save more on your mortgage

For roughly a week now, the average rate on a 30-year fixed mortgage was above 6%, according to Bankrate data — but the latest numbers show that rates have dipped below 6%. Indeed, data released today from Bankrate shows that the average rate on a 30-year fixed mortgage is 5.95%, and for a 15-year fixed-rate mortgage it is down to 5.13%. You can see the lowest mortgage rates you can get now here. 

Of course, you may be lamenting you didn’t snag a 3-ish% rate while they were available, so we’re sharing some tips on what can you do to save on a mortgage now.

First, if you can afford a 15-year mortgage, rates are lower on those. Another thing to consider is an adjustable rate mortgage (ARM) — but only if it makes sense for you. The latest Bankrate data shows that average rates on 5/1 ARMS (rates are fixed for five years, then adjust) are 4.26%, significantly lower at the start than both the 15-year and 30-year fixed rate mortgages. That said,  ARMs tend to make the most sense for short-term homeowners who only plan to be in the same home for 5 to 7 years. One caveat, though, is that because rates become variable, “ARMs can be risky, and in the long run they may end up costing more than a fixed mortgage with a higher upfront rate,” says Jacob Channel, LendingTree’s senior economic analyst, recently told MarketWatch Picks.

Regardless of the type of loan you get, experts advise gathering quotes from 3 to 5 lenders and figuring out some important numbers, like your credit score (improve it if needed) and debt-to-income ratio (DTI), which can help you determine what rate you can expect to pay. To calculate your DTI, divide your monthly debt payments (mortgage; credit card payments; auto, student or personal loans; child support) by your gross monthly income. If the number you come out with is at or below 36%, your chances of qualifying for a mortgage, and at a better rate, are better than if you come out with a higher number as your DTI. You can see the lowest mortgage rates you can get now here. 

If you’re still looking for ways to bring an interest rate down, buying discount points, which are fees paid to reduce an interest rate, can help; generally one point roughly decreases the interest rate by 0.25%, though this can vary. “When you pay discount points, you’re handing the lender a chunk of interest payments up front in exchange for paying less interest every month,” Holden Lewis, home and mortgage expert at Nerdwallet, recently told MarketWatch Picks. But note that there may be limits to how many discount points you can buy, and buying points may not make sense, especially if you don’t plan to stay in the home for long.