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Posted 04/14/2016

Freddie Mac: 30-Year Mortgage Rates Drop To 153-Week Low

Freddie Mac: 30-year fixed rate mortgage rates drop to 3.58%

Mortgage Rates Drop To 3-Year Low

Shopping for a new mortgage? Today's mortgage rates are lower than a week ago.

According to Freddie Mac's weekly survey of more than 100 mortgage lenders, conventional 30-year fixed rate mortgages dropped another 1 basis point (0.01%) last week, to hit 3.58% nationwide, on average.

It marks the second straight week that mortgage rates dropped.

15-year mortgage rates dropped, too, falling 2 basis points (0.02%) to reach an average of 2.86% with an accompanying 0.5 discount points paid at closing; and, 5-year ARM mortgage rates rose 2 basis points (0.02%) to 2.84 percent.

Mortgage rates are their lowest since May 2013.

As a result, more than 7 million households are now potentially eligible to refinance, and first-time home buyers are now finding homeownership to be cheaper than renting in many U.S. cities.

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

Click to see today's rates (Jul 27th, 2016)

Freddie Mac: Mortgage Rates Drop To 3.58%

This year's mortgage rates have defied prediction.

Despite rising for the second straight week, Freddie Mac's weekly mortgage rate survey shows the average 30-year fixed rate interest rate at 3.58% nationwide, which is more than 40 basis points (0.40%) below the levels from January; and below the year-ago interest rates, too.

It's 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 have dropped.

Falling mortgage rates make homes more affordable.

However, if you're in the process of buying a home, you're noticing that falling mortgage rates have been offset by a rise in home valuations.

Access to cheap money is good, but homes are more expensive to buy, which raises the amount of cash required to make a down payment.

Last year, a 10% down payment on a home for $400,000 cost you $40,000. Today, though, that home is worth $424,000. Your 10 percent down payment now costs $42,400.

For some home buyers, the prospect of a larger down payment may put homeownership beyond their reach.

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 (Jul 27th, 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?

30-year mortgage rates are lower as compared to the start of the year, dropping more than 40 basis points (0.40%).

As today's mortgage rates have dropped, monthly payments have dropped, too -- lowering borrowers' debt-to-income (DTI) ratios.

Debt-to-income is a key part of the mortgage approval process. Any drop in your DTI can make it easier to get mortgage-approved by a bank -- for either a purchase loan or home loan refinance.

When mortgage rates drop, it also raises a buyer's maximum allowable home purchase price. This is because, for the same payment, a buyer can borrow more money.

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, that same loan costs just $1,361 per month -- a reduction of five 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 (Jul 27th, 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)