Mortgage Rates

July 29, 2015 12:53 AM Eastern

Refinance rates now in Ashburn, VA[Change this]

Home Price (Purchase)
When you get a mortgage to purchase a home, the lender uses the lower of the agreed-upon purchase price or the property's appraised value to determine your maximum loan amount. The loan amount divided by the property home price equals your loan-to-value ratio, or LTV. That ratio is one of the major factors that lenders use to set your mortgage rate. If your LTV exceeds 80 percent, you'll probably be required to pay mortgage insurance, which increases your monthly payment. If the property appraises for less than the agreed-on purchase price, you are not usually required to complete the purchase.
Home Value (Refinance)
This is your estimate of the current value of your property. When you refinance, your home is almost always evaluated by a licensed appraiser. The refinance loan amount divided by the property's appraised value equals your loan-to-value ratio (LTV), and that number is one of the major factors that determine your mortgage rate. To get an accurate refinance rate quote, your home value estimate must be reasonably accurate.
Down Payment
The down payment is the amount you pay upfront when you finance property. Your purchase price minus your down payment equals your mortgage amount. The higher your down payment, the more likely you are to be approved for a home loan. If your down payment is less than 20 percent of the purchase price, you'll probably be required to pay for mortgage insurance, which increases your monthly payment.
Credit Score
Your credit score is a number designed to measure your credit-worthiness. It's based on a formula that combines many factors, including your payment history, amount of credit used and number of accounts. This number is used by lenders to calculate the probability that you'll default on your mortgage. Most lenders won't approve mortgages to applicants with credit scores lower than 620. Your credit score is one of the most important factors that determines your mortgage rate - applicants with higher scores are offered better mortgage rates.

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Mortgage rate quotes displayed on LendingTree LoanExplorer℠, including loan pricing data, rates and fees, are provided by third party data providers including, but not limited to, Mortech®, a registered trademark of Zillow®, LoanXEngine, a product of Mortgage Builder Software, Inc., and LoanTek, Inc.

Mortgage Rate Trends

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Mortgage Rate Lock Recommendation

July 28 2015
  •   Lock if closing in 7 days:
    Rates may be heading up
  •   Lock if closing in 15 days:
    Rates may be heading up
  •   Lock if closing in 30 days:
    Rates may be heading up

If you visited this corner of the Internet yesterday, you may have read about two conflicting pressures on mortgage rates, one pushing them up and the other pulling them down. Today, the one tending to push them up looks stronger while the one exerting downward pressure is weaker.

The one that was principally pulling them down was the safe-haven effect, which sees money pouring into U.S. bond and mortgage markets when financial or economic crises anywhere in the world spook investors. Twenty-four hours ago, the need for a haven seemed strong because the Chinese Shanghai share index had just dropped more than 8 percent, its largest fall since early 2007. Falls continued today, but at a much slower rate, with the Shanghai Composite closing down 1.7 percent.

The pressure pushing rates up is led by speculation that the Federal Reserve's Federal Open Markets Committee (FOMC), which has its monthly meeting today and tomorrow, is going to move toward increasing the interest rates it controls, with the first rise possibly taking effect as early as September. Former Richmond Fed President Alfred Broaddus told CNBC this morning he thought September a likely date, assuming no unexpectedly disastrous economic data were published in the meantime.

In themselves, this morning's disappointing figures from the S&P/Case-Shiller home price index are unlikely to move either the FOMC or investors much. These revealed a shock drop of -0.2 percent in home prices in May in the 20 metropolitan regions the index covers. Meanwhile, the Purchasing Managers' Index (PMI) services flash for July was much better than expected at 55.2, compared with 54.8 in June. However, the Conference Board's consumer confidence measure took a tumble to 90.9 in July. That was disappointing even within the context of an expected fall from June's outstanding 99.8. Conference Board director of economic indicators Lynn Franco eased the pain in a statement:

Consumer confidence declined sharply in July, following a gain in June. Consumers continue to assess current conditions favorably, but their short-term expectations deteriorated this month. A less optimistic outlook for the labor market, and perhaps the uncertainty and volatility in financial markets prompted by the situation in Greece and China, appears to have shaken consumers' confidence. Overall, the Index remains at levels associated with an expanding economy and a relatively confident consumer.

Regular readers will know all about the very close relationship between mortgage rates and yields on 10-year U.S. Treasury bonds. When one goes up or down, the other almost always follows, roughly in proportion. In recent days, those bond yields have been falling, although at 10:00 a.m. ET this morning they were inching up. Still, those who like a little risk in their lives might wish to postpone locking their mortgage rates in the hope the seven-day downward trend will continue. However, that's a bit of a gamble, and others may prefer to lock now, especially as the potential gains of making that "float" wager look likely to be relatively small.

The average rate for a 30-year fixed-rate mortgage during week ending July 23 was 4.04 percent with an average 0.6 point, according to Freddie Mac. The same rate averaged 4.09 percent during week ending July 16, and 4.04 percent seven days before that. This was the sixth consecutive week during which that particular rate began with a "4."

Forecasting the direction of mortgage rates is difficult at the best of times. Something that might be expected in some circumstances to push both them and bond yields up can in others exert a downward force — and vice versa. Those forecasts are especially perilous when the future prospects of economies around the world (and at home!) are so hard to judge. However, absent more shock developments, few expect large changes in mortgage rates within the scope of these rate lock recommendations.

What Does it Mean to "Lock" Your Mortgage?

"Locking" your mortgage means that you and your lender have agreed on an interest rate and price for your home loan. Once your loan is locked, that's the rate and price you get, regardless of what happens in the financial markets. If rates go up, you're protected but if rates go down, you won't benefit either -- you close your loan at the rate you've locked and you can’t change it. Locks have expiration dates ranging from 30 to 60 days or more, and the longer your lock period, the more it costs. If you don't close your loan on time, you could end up paying a higher interest rate.

When Should You Lock?

You can lock in your loan at any time during the process. Until you lock your interest rate, you are said to be "floating" your mortgage. The only rule is that you have to lock in before you can close on your purchase or refinance.

The decision to lock or float your loan can have a long term impact so it’s important you make the right choice. That’s why we offer a quick rundown of the key factors that drive mortgage rates today and everything you need to know.

Mortgage Rates by State

Mortgage rates can vary a lot between lenders on any given day. So, if you only get one mortgage quote, you won't have any idea if there's a better deal out there. That's why the best way to get a mortgage rate it to request quotes from multiple lenders and compare interest rates, loan terms and closing costs. It puts you on in charge and keeps the banks competing to get you the best rate possible. Remember, even .1 percent can amount to thousands of dollars over the course of a loan. Make sure you shop around!

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