July 12, 2024—Rates Move Down – Forbes Advisor – Technologist

Today, the mortgage interest rate on a 30-year fixed mortgage is 7.28%, according to Curinos, while the average rate on a 15-year mortgage is 6.53%. On a 30-year jumbo mortgage, the average rate is 7.29%.

Current Mortgage Rates for July 12, 2024

30-Year Mortgage Rates

Borrowers paid an average rate of 7.28% on a 30-year mortgage. This was down from the previous week’s rate of 7.39%.

Currently, the average annual percentage rate (APR) on a 30-year fixed-rate mortgage is 7.30%. The APR contains both mortgage interest and the lender fees to help give a more complete picture of loan costs.

To get 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 including principal and interest (taxes and fees not included) each month, the Forbes Advisor mortgage calculator shows. That’s around $146,414 in total interest over the life of the loan.

15-Year Mortgage Rates

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

The APR on a 15-year fixed is 6.56%. It was 6.56% this time last week.

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

Jumbo Mortgage Rates

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

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

How To Calculate Mortgage Payments

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

Simply input the following information:

• Home price
• Down payment amount
• Interest rate
• Loan term
• Taxes, insurance and any HOA fees

What’s an APR, and Why Is It Important?

APR, or annual percentage rate, is a calculation that includes both a loan’s interest rate and a loan’s finance charges, expressed as an annual cost over the life of the loan. In other words, it’s the total cost of credit. APR accounts for interest, fees and time.

Since APRs include both the interest rate and certain fees associated with a home loan, the APR can help you understand the total cost of a mortgage if you keep it for the entire term. The APR will usually be higher than the interest rate, but there are exceptions.

How Are Mortgage Rates Determined?

Mortgage interest rates are determined by several factors, including some that borrowers can’t control:

• Federal Reserve. The Fed rate hikes and decreases adjust the federal funds rate, which helps determine the benchmark interest rate that banks lend money at. As a result, mortgage rates tend to move in the same direction with the Fed’s rate decision.
• Bond market. Mortgages are also loosely connected to long-term bond yields as investors look for income-producing assets—specifically, the 10-year U.S. Treasury Bond. Home loan rates tend to increase as bond prices decrease, and vice versa.
• Economic health. Rates can increase during a strong economy when consumer demand is higher and unemployment levels are lower. Anticipate lower rates as the economy weakens and there is less demand for mortgages.
• Inflation. Banks and lenders may increase rates during inflationary periods to slow the rate of inflation. Additionally, inflation makes goods and services more expensive, reducing the dollar’s purchasing power.

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

• Credit score. Applicants with a credit score of 670 or above 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 (DTI) ratio. Lenders may issue mortgages to borrowers with a DTI of 50% or less. However, applying with a DTI below 43% is recommended.
• Loan-to-value (LTV) ratio. Conventional home loans charge private mortgage insurance when your LTV exceeds 80% of the appraisal value, meaning you need to put at least 20% down to avoid higher rates. Additionally, FHA mortgage insurance premiums expire after the first 11 years when you put at least 10% down.
• Loan term. Longer-term loans such as a 30-year or 20-year mortgage tend to charge higher rates than a 15-year loan term. However, your monthly payment can be more affordable over a longer term.
• Residence type. Interest rates for a primary residence can be lower than a second home or an investment property. This is because the lender of your primary mortgage receives compensation first in the event of foreclosure.

What Is the Best Type of Mortgage Loan?

Many home buyers are eligible for several mortgage loan types. Each program can have its own advantages:

• Conventional mortgage. A conventional home loan is ideal for borrowers with good or excellent credit to qualify for competitive rates. Additionally, making a minimum 20% down payment helps you waive private mortgage insurance premiums.
• FHA loan. An FHA home loan is best when applying with imperfect credit or a low down payment. You can put as little as 3.5% down with a credit score above 580. A minimum 10% down payment is necessary for credit scores ranging from 500 to 579.
• VA loan. Borrowers with a qualifying military background may prefer a VA loan for 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 loan. Applicants in eligible rural areas can buy or build a home with no down payment, although an upfront and annual guarantee fee applies. Additionally, income requirements apply and this program requires a moderate income or lower.
• Jumbo loan. Homebuyers in a high-cost-of-living area will need to apply for a jumbo loan when the loan amount exceeds the Federal Housing Finance Agency’s conforming loan limits. The limit in most municipalities is $726,200 in 2023.

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