The average 30-year fixed mortgage rate increased again this week, reaching 5.3%, according to Freddie Mac. Though rates are expected to continue rising, there are signs that they might not increase as quickly as they have in previous months. In April, mortgage rates rose at a slower pace than they did in March.

If you’re planning to buy a home, it’s more important than ever to shop around with multiple lenders and consider all the different mortgage options available to you. Once you have a good idea of what lenders are offering and what you qualify for, you can more easily compare your options and pick the one that’s most affordable for you.

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Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.

Click “More details” for tips on how to save money on your mortgage in the long run.

What is a fixed-rate mortgage?

When you get a mortgage, you’ll need to decide what type of rate you want: fixed or adjustable.

A fixed-rate mortgage locks in your rate for the entire length of your mortgage. This means that even if market rates go up or down, yours will stay the same. Fixed-rate mortgages can be beneficial for borrowers looking for stability; though you might miss out if rates trend lower, you don’t have to worry about your monthly payment increasing if rates go up. 

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An adjustable-rate mortgage keeps your rate the same for a predetermined amount of time, then changes it periodically. A 5/1 ARM locks in your rate for the first five years, then the rate fluctuates once per year. This is a riskier approach, because you risk your rate going up later. 

Adjustable rates can be attractive because they’re often lower than 30-year fixed rates. If you plan to sell your home or refinance your mortgage before the ARM’s introductory fixed period is over, an ARM might be a good choice for you. Just be sure you understand how much your rate and payment could increase when the intro period is over.

If you’re planning to stay in your home for a long time or just prefer the stability of a fixed monthly payment, a fixed-rate mortgage would likely be a better fit for you.

How are mortgage rates determined?

Mortgage rates are determined by a combination of factors — some you can control, and some you can’t.

The main external factor is the economy. Interest rates tend to be higher when the US economy is thriving and lower when it’s struggling. The two main economic factors that impact mortgage rates are employment and inflation. When employment numbers and inflation go up, mortgage rates tend to increase.

You can control your finances, to a certain extent. The better your …read more

Source:: Business Insider

      

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