Today’s Mortgage Rates Changing Math Of 15-Year Vs. 30-Year Fixed-Rate Mortgage
Home buyers and refinancing borrowers can change how long it takes to close on a loan; today’s live mortgage rates and the 5-day trend; and, deciding which is better: the 30-year fixed or 15-year fixed-rate mortgage.
Make Your Mortgage Loan Close Faster
New data shows mortgage lenders are taking longer to approve home loans for home buyers.
According to Ellie Mae, whose mortgage software touches more than three million loan applications annually, mortgage lenders required an average 42 days to underwrite and approve a mortgage loan last month.
It’s the most days recorded since February.
For a lot of today’s buyers, having to wait six weeks on a lender creates a competitive disadvantage; sellers prefer buyers who are able to close quickly.
And, if you prefer to close in fewer than 6 weeks, there are three steps you can follow to help your mortgage loan close faster.
- Get pre-approved before you start shopping for homes
- Comparison shop lenders on rates, and also speed
- Respond to requests for information quickly
The first step toward a faster closing is getting pre-approved for a mortgage.
Readying W-2s, pay stubs, tax returns, and other financial documentation can be a time-intensive process, and when you’re getting pre-approved, you’ll be gathering those verifications in advance of actually needing them.
Pre-approvals can save a week or more off your home loan timeline.
The next step toward a faster closing is to comparison shop mortgage lenders for speed.
Some mortgage lenders close loans in three weeks or fewer. Others regularly require two months or more. You’re within your rights to ask about it, too.
Comparison shop lenders based on a combination of rates, service, and speed because the lowest mortgage rate available won’t work if that lender can’t close within your timeline.
Lastly, to close faster, be responsive throughout your mortgage approval period.
As part of your purchase, you’ll hear from your team a lot. Your team includes your lender, your real estate agent, your insurance company, the title company, your home inspector, and more. Be available to them.
Don’t screen calls. When someone reaches out, it’s because you have information that someone else needs. The faster you get back, the faster you can close.
Today’s Mortgage Rates & Interest Rate Trends
Mortgage rates are rising today.
As compared to last week, interest rates for purchase and refinance loans are higher, raising the monthly cost of paying on a mortgage.
Versus one month ago, mortgage rates are lower by approximately 0.250 percentage points.
And, as rates dropped, home values continued to climb. Homeowners with FHA-backed home loans should consider canceling FHA MIP via a refinance.
Today’s fixed- and adjustable-rate mortgages are moving as follows:
- Conforming mortgages: Lower
- FHA mortgages: Lower
- VA mortgages: Lower
- USDA mortgages: Lower
- Jumbo mortgages: Lower
Mortgage rates vary by home and homeowner. There are more than a dozen loan traits that comprise a final quote from a lender including your loan size, your credit score, and the state in which your home is located.
Your home’s census tract and your total household income can affect your quoted rate, too. Don’t settle for “ballpark” rates — they’re rarely honored.
For a true and accurate mortgage rate quote, give a complete application to a lender.
Get Today’s Mortgage Rates
Today’s Interest Rates Favor 15-Year Mortgages Over 30-Year Mortgages
Today’s mortgage rates favor the 15-year fixed-rate home loan.
According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), an interest rate poll of more than 100 U.S. lenders made weekly, conventional fixed-rate mortgage rates are higher from the start of the year.
Rates for 30-year and 15-year fixed-rate mortgage loans are higher by roughly 0.625 percentage points, which has increased homeownership costs for buyers of homes and refinancing households.
However, because of how fixed-rate mortgages amortize, rising rates affecting the 30-year and 15-year loans differently and now, at today’s rates, homeowners using 15-year loans pay half as much mortgage interest as compared to homeowners using comparable 30-year loans.
At today’s rates, for every $100,000 borrowed, a 15-year mortgage will yield $50,000 in mortgage interest savings.
Are 15-year mortgages better than 30-year mortgages? That depends on your situation.
In general, 15-year mortgages are best for homeowners whose financial philosophies include the minimization of interest payments and the ownership of assets; fifteen-year fixed-rate mortgages are better suited to these goals than thirty-year ones.
And, homeowners who choose 15-year mortgages are comfortable with the higher payments associated with paying off a mortgage in half the typical time.
By contrast, 30-year mortgages are best for homeowners who prefer to make smaller monthly payments and to maximize how much home they can afford.
90 percent of U.S. homeowners use 30-year home loans.
Talk to a mortgage lender about the differences between 15-year loans and 30-year loans. Either product can help you reach financial goals. A lender can help you choose which works best.