July 12, 2024 – Interest rates fall – Forbes Advisor

According to Curinos, the mortgage interest rate for a 30-year fixed-rate mortgage today is 7.28%, while the average interest rate for a 15-year mortgage is 6.53%. For a 30-year jumbo mortgage, the average interest rate is 7.29%.

Current mortgage rates for July 12, 2024

Mortgage interest rates for 30-year term

For a 30-year mortgage, borrowers paid an average interest rate of 7.28 percent, down from the previous week’s rate of 7.39 percent.

Currently, the average annual percentage rate (APR) for a 30-year fixed-rate mortgage is 7.30%. The APR includes both mortgage interest and lender fees to give a more complete picture of the cost of borrowing.

To give you an idea of ​​how much you’ll pay, a $100,000 mortgage with a 30-year fixed-rate loan at the current average interest rate of 7.28% will cost you about $684 each month including principal and interest (excluding taxes and fees), according to Forbes Advisor’s mortgage calculator. That’s about $146,414 in total interest over the life of the loan.

Mortgage interest rates for 15 years

The average interest rate for a 15-year mortgage (fixed rate) is 6.53%. At the same time last week, the 15-year fixed rate mortgage was 6.67%.

The annual percentage rate for a 15-year fixed-rate mortgage is 6.56%. This time last week, it was 6.56%.

At an interest rate of 6.53%, for every $100,000 you borrow, you would pay $873 per month in principal and interest. Over the life of the loan, you would pay a total of $57,106 in interest.

Jumbo mortgage rates

The current average interest rate on a 30-year fixed-rate jumbo mortgage is 7.29% — down 0.11 percentage points from last week. The interest rate on a 30-year jumbo mortgage had a 52-week low of 5.00% and a 52-week high of 10.50%.

A 30-year jumbo mortgage with today’s fixed rate of 7.29% will cost you $685 per month in principal and interest per $100,000. For a $750,000 jumbo mortgage, monthly principal and interest payments would be about $5,138.

How to calculate mortgage payments

To get an estimate of your mortgage costs, using a mortgage calculator can be helpful.

Simply enter the following information:

• House price
• Deposit amount
• Interest rate
• Loan term
• Taxes, insurance and any HOA fees

What is an effective annual interest rate and why is it important?

APR (annual percentage rate) is a calculation that includes both the interest rate of a loan and the finance cost of a loan, expressed as an annual cost over the life of the loan. In other words, it is the total cost of the loan. The APR takes into account interest, fees and term.

Because the APR includes both the interest rate and certain fees on a home loan, the APR can help you understand the total cost of a mortgage if you keep it for the full term. The APR is usually higher than the interest rate, but there are exceptions.

How are mortgage interest rates determined?

Mortgage interest rates are determined by several factors, including some that are beyond the borrower’s control:

• The US Federal Reserve. The Fed’s interest rate hikes and cuts adjust the federal funds rate, which sets the benchmark interest rate at which banks lend money. As a result, mortgage rates tend to move in the same direction as the Fed’s interest rate decision.
• bond market. Mortgages are also loosely tied to long-term bond yields, as investors seek income-producing assets—particularly 10-year U.S. Treasury bonds. Mortgage rates tend to rise when bond prices fall, and vice versa.
• Economic health. During strong economic times, when consumer demand is higher and unemployment is lower, interest rates may rise. Expect lower interest rates when the economy weakens and demand for mortgages falls.
• Inflation. Banks and lenders can raise interest rates during times of high inflation to slow the rate of inflation. In addition, inflation makes goods and services more expensive, which reduces the purchasing power of the dollar.

While the above factors set the base rate for new mortgages, there are several areas borrowers can focus on to get a lower interest rate:

• Credit-worthiness. Applicants with a credit score of 670 or higher tend to have an easier time qualifying for a better interest rate. Typically, most lenders require a minimum score of 620 to qualify for a conventional mortgage.
• Debt-to-income ratio (DTI). Lenders can provide mortgages to borrowers with a DTI of 50% or less, but it is recommended to apply with a DTI below 43%.
• Loan-to-value ratio (LTV). With conventional home equity loans, private mortgage insurance is charged if your LTV exceeds 80% of the appraised value, meaning you must put at least 20% down to avoid higher interest rates. Additionally, FHA mortgage insurance premiums are waived after the first 11 years if you put at least 10% down.
• loan term. Longer-term loans, such as 30- or 20-year mortgages, typically carry higher interest rates than 15-year loans. However, your monthly payment may be cheaper over a longer period.
• Type of residence. Interest rates on a primary residence may be lower than on a second home or investment property. This is because the lender on your primary mortgage will receive compensation first in the event of a foreclosure.

Which type of mortgage loan is best?

Many homebuyers are eligible for several types of mortgage loans. Each program can have its own benefits:

• Conventional mortgage. A conventional home equity loan is ideal for borrowers with good or excellent credit who want to qualify for favorable interest rates. In addition, with a minimum 20% down payment, you can waive private mortgage insurance premiums.
• FHA loans. An FHA home loan is best if you are applying with bad credit or a low down payment. If your credit score is above 580, you can put down as little as 3.5%. For credit scores between 500 and 579, a minimum down payment of 10% is required.
• VA loans. Borrowers with a military background may prefer a VA loan because of its flexibility. A down payment may not be required. While you pay a one-time funding fee, there are no ongoing mortgage insurance premiums or service fees.
• USDA loans. Applicants in eligible rural areas can buy or build a home with no down payment, but there is an upfront payment and an annual guarantee fee. Additionally, income requirements apply and this program requires a middle-income or lower income.
• Jumbo loans. Homebuyers in high-cost-of-living areas must apply for a jumbo loan if the loan amount exceeds the Federal Housing Finance Agency’s loan limits. In most communities, the limit will be $726,200 in 2023.

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