The national average rate for 15-year fixed mortgages hit 4.74%, slightly down from Monday, according to Bankrate data from June 9. But 30-year fixed mortgages climbed to an average of 5.62% and adjustable rate mortgages (ARMs) hovered at 3.94%. (You can see the lowest rates you may qualify for here.)
If you’re in the market for a mortgage, it’s important to lock in the lowest rate available so you can pay the least amount of money in the long run. This MarketWatch Picks guide offers eight tips to finding the lowest rates on a mortgage.
Getting quotes from 3 to 5 lenders and figuring out some important numbers, like your credit score and debt-to-income ratio (DTI), 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. You’ll want the number to come out at or below 36% in order to qualify for a mortgage.
You also may want to weigh the pros and cons of buying points. Discount points are fees borrowers pay upfront to reduce the interest rate on their mortgage. Usually,
one point costs 1% of your mortgage amount, with each point lowering the loan’s interest rate by one-eighth to one-quarter of a percent. But note that buying discount points isn’t always worth it because your breakeven point on them may be years down the road; if you don’t plan on staying in your house very long, think twice about this.