September 28, 2021

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Mortgage News

Today’s Mortgage and Refinance Rates: July 5, 2021

Mortgage and refinance rates are generally low today, so it could be a good day to secure a low interest rate.

We show the nationwide average mortgage rates, but the exact rates available depend on where you live, your individual finances, and what kind of mortgage you are getting. Overall, however, mortgage rates are at historic lows.

Current mortgage rates

Conventional Tariffs from Money.com; government-sponsored rates from RedVentures.

Current refinancing rates

Conventional Tariffs from Money.com; government-sponsored rates from RedVentures.

How are mortgage rates determined?

Mortgage rates are largely determined by the economy. Interest rates are higher when the US economy is thriving and lower when it is in trouble.

Employment and inflation are the two main economic factors that affect mortgage rates. As employment and inflation rise, mortgage rates tend to follow suit.

However, you do have some power over your mortgage rate. Here are the factors you can control:

  • credit-worthiness. The higher your credit rating, the lower your mortgage rate should be. To improve your score, focus on paying all your bills and paying off debts on time.
  • Debt-Income Ratio. Your DTI ratio is the amount you pay for your debt each month divided by your gross monthly income. The lower your DTI ratio, the better. The minimum DTI ratio depends on the lender and the type of mortgage you are getting, but is usually between 36% and 50%. If your ratio is even lower than the lender’s minimum, you could get a better interest rate.
  • deposit. Depending on the type of mortgage you are getting, you may need 0% to 20% for a down payment. If you can pay more than the minimum deposit you will likely get a lower rate.
  • Type of mortgage. Prices on compliant mortgages (which you probably refer to as “regular mortgages”) are already low. You pay less for a government supported mortgage through the FHA, become, or USDA. You pay a higher price for a Jumbo mortgage.
  • Mortgage term. The shorter your mortgage term, the lower your interest rate will be. For example, you pay less for a 15 year term as a 30 year term. Note, however, that your monthly payments will be higher in less time.

When to set a mortgage rate

It is usually a good idea to set your mortgage rate when you are ready to start buying homes.

To secure your tariff, Apply for pre-approval with a lender. Once you’ve received your pre-approval letter, your tariff will typically be locked for 60 to 90 days.

Getting a pre-approval letter is useful before making an offer on a home. Showing the seller a pre-approval letter indicates that you are a competitive buyer who is in a good financial position and can give your application an edge over other offers.