Over the past few months mortgage rates have shot up - with 30 year fixed rates going from about 3.5% early this year to upwards of 5.6% recently - and pros don't think that trend will stop anytime soon. The average national mortgage rates for 30 year fixed rates held steady at 5.64% with a 5.66% APY this week. 15 year fixed rates did tick up slightly to 4.88% with a 4.92% APY, according to the latest data from Bankrate released Friday. The consensus among economists and real estate pros is that mortgage rates will continue to trend upward. Even though current rates are pretty low compared to many other periods in history, they are much higher than they were at the end of 2021 and in fact reached their highest point in 11 years last month.
It may seem as though small mortgage rate fluctuations of even 1% are harmless, but in reality, an increase that tiny can equal tens of thousands of dollars over the life of a loan. With mortgage rates fluctuating constantly, locking in the lowest rate is essential in order to pay the least interest and the lowest monthly payment on your home. Even if you can't get a rate as low as you hoped, experts don't recommend halting your home search because it's nearly impossible to time the market and you might miss out on a home you love and can afford.
How do I get the lowest mortgage rate?
Experts say it's a good idea to get quotes from three to five lenders to make sure you get the lowest mortgage rate. When shopping for a loan, take the opportunity to familiarize yourself with different lenders rates and terms and find the one that suits your needs best.
In addition to your financial accounts and credit score, keep in mind that lenders often look for applicants'debt-to-income ratio DTI, a number you want to make sure is at or below 36%. You can divide your monthly debt payments, credit card payments, auto, student or personal loans, child support by your gross monthly income. If you are within 36% of the threshold, your chances of being denied a mortgage decrease as having a higher DTI number is the single top reason borrowers are denied mortgages, according to data from NerdWallet.