Q&A: Have I Missed the Best Mortgage Rates?

Q: Procrastination is one of my bad habits, and I wish I had taken advantage of rock-bottom home loan rates a few weeks ago. Can I still get a great deal?

A: Rates on mortgages have gone up, but to put things in perspective, Freddie Mac reported on June 6 that the average rate for a 30-year fixed rate mortgage was 3.91 percent for borrowers paying 0.70 point. The average rate for a 30-year fixed rate mortgage in June 2012 was 3.68 percent with average points paid at 0.70 percent. This represents a difference of 0.23 percent, or less than a quarter percent.

Mortgage rates change quickly, and if rates continue to rise, you may want to consider a hybrid adjustable rate mortgage loan. These loans start with an introductory fixed rate for three-to-ten years; when the intro period expires, the mortgage converts to an adjustable rate mortgage. Last week’s average mortgage rate for a 5/1 adjustable rate mortgage was 2.75 percent with borrowers paying an average of 0.50 point. These terms would provide significant savings as compared to a 30-year fixed rate mortgage at current mortgage rates, but the low fixed rate lasts for only five years. After that, the mortgage rate for this loan would adjust annually.

Hybrid adjustable rate mortgages can be a good choice in certain situations. For example, if you’re buying a starter home and are planning to move within five years, the 5/1 ARM is a good choice. Request and compare mortgage quotes.

Actual mortgage rates, closing costs and discount points can vary due to a variety of circumstances. Comparing mortgage quotes helps you find your best home loans; remember to check out estimated closing costs and discount points to find more savings.

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