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Posted February 4, 2016
in Mortgage Rates

Freddie Mac: 30-Year Mortgage Rates Drop For 5th Straight Week

Freddie Mac: 30-year mortgage rates drop to 3.72%

Mortgage Rates Fall For 5th Straight Week

It's an excellent time to mortgage shop. Current mortgage rates just keep dropping.

According to Freddie Mac's weekly survey of more than 100 mortgage lenders, conventional 30-year fixed rate mortgages dropped another 7 basis points (0.07%) last week, marking the fifth straight week that mortgage rates have dropped.

30-year conventional mortgage rates now average 3.72% nationwide for borrowers willing to pay 0.6 discount points at closing.

15-year mortgage rates dropped, too, shedding 6 basis points (0.06%) last week to reach an average of 3.01% with an accompanying 0.5 discount points paid at closing; and, 5-year ARM mortgage rates fell 5 basis points (0.05%) to 2.85%.

Mortgage rates haven't been this low since April 2015.

However, if you're looking for today's lowest available rates, you may want to revisit the VA loan. VA mortgage rates are today's cheapest.

More than 6.5-million households are potentially eligible to refinance with at current market levels and first-time home buyers may find that homeownership is cheaper than renting.

It's an excellent time to comparison shop your home loan.

Click to see today's rates (Feb 12th, 2016)

Freddie Mac: Mortgage Rates Drop To 3.72%

It's been an unexpected few weeks for this year's mortgage rates.

Freddie Mac's weekly mortgage rate survey shows another 7 basis point (0.07%) decrease in the average 30-year fixed rate interest rate, lowering the benchmark rate to 3.72% nationwide.

This is the exact opposite of what Wall Street forecast for 2016 mortgage rates.

2016 was supposed to be the year that the Federal Reserve ended its low-rate policy; and that the nation showed steady economic growth.

However, with energy costs continuing to drop and with China's ongoing economic uncertainty, the U.S. economy suddenly looks a bit vulnerable. Safe-haven buying has picked up and mortgage rates are dropping.

As compared to December 31, rates are lower by 29 basis points (0.29%). This marks the steepest drop in mortgage rates since late-2014.

Falling mortgage rates make homes more affordable. However, if you're in the process of buying a home today, you've noticed the home supplies are scarce and demand for homes is high.

This supply-demand imbalance, fortified by today's low rates, leads to rising home prices which increases the number of dollars required to bring to closing.

Thankfully, low- and no-downpayment mortgages remain readily available, along with zero-closing cost home loans, which make it easier to afford a new home.

Click to see today's rates (Feb 12th, 2016)

Use Zero-Closing Cost Mortgages To Save Money

A zero-closing cost mortgage is a mortgage for which all closing costs are paid by the lender.

In general, a $250,000 mortgage can be converted to "zero-closing cost" by adding a quarter-percentage point increase to the interest rate.

Doing a zero-closing mortgage adds approximately $15 to a monthly payment for every $100,000 borrowed. The amount saved will depend on your closing costs, which vary by state.

Note, though, that you may be eligible for lower rates than what Freddie Mac's survey reports. This is because the Freddie Mac survey covers conventional loans only.

Rates for other loan types, including VA, USDA, FHA, and jumbo loans are different from Freddie Mac's survey -- and they're typically lower.

VA mortgage rates are currently three-eighths of a percentage point (0.375%) lower than a comparable loan via Fannie Mac or Freddie Mac, and rates for FHA loans beat conventional loans, too.

The typical FHA mortgage rate is now roughly 12.5 basis points (0.125%) below the conventional rate and, for homeowners with credit scores below 740, the FHA loan may be a better option low-downpayment option as compared to the Conventional 97.

FHA mortgage insurance premiums (MIP) were lowered earlier this year to help with home affordability.

How Much Will Your Mortgage Cost Each Month?

Since the start of 2016, 30-year mortgage rates have put together their best 5-week performance since mid-2014. Mortgage borrowers are ow able to capitalize on that.

Lower mortgage rates have brought lower monthly payments and lower payments cause a borrower's debt-to-income (DTI) to drop.

An drop in your DTI can make it easier to get approved on a home loan; or, to qualify for a home loan refinance.

Debt-to-income calculations are among the most important pieces of a mortgage approval.

When mortgage rates drop, it also raises a buyer's maximum home purchase price. This is because the buyer is less restricted by payment and can raise its total loan size for the same monthly payment.

Use our 3-in-1-mortgage calculator to calculate your payment.

During the last week of last year, a $1,434 payment would cover a mortgage for $300,000. Today, with mortgage rates down more than one-quarter percentage point, that same loan costs just $1,384 per month -- a reduction of nearly four percent.

For every one percentage point drop in mortgage rates, a buyer's maximum home purchase price increases by approximately 11 percent.

What Are Today's Mortgage Rates?

Today's interest rates are rapidly approaching their best levels of all-time, but don't wait for rates to bottom out. Take a look at today's live mortgage rates and see what's possible for your home and your loan.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (Feb 12th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)