National Mortgage Rates

Homeowners and potential home buyers are in a wonderful market for low interest rate mortgage loans. Over the past year, interest rates have only varied by about a half percent or less. Looking back 36 years, today’s rates are near historical lows with national mortgage rates around 5.05%. High interest rates in that period were 16.63%, in 1981.

The current average national mortgage rate for 30 year fixed mortgages with less than one point is at 5.00%. 15 year fixed rate mortgages (FRM) are at 4.36%. One year adjustable rate mortgage (ARM) loans are being offered averaging 4.07% nationally. 5//1 ARMs are at 3.97%. These figures are from Freddie Mac as of noon on May 6, 2010.

Buying a home is one of the best and largest investments that a person can make during their lifetime. Home ownership is being encouraged by the government tax credit plan that can help new buyers buy homes. If a home buyer is able to get a long term fixed rate mortgage, they have the benefit of knowing that their monthly payment will always remain at the same amount no matter what happens to interest rates in the future.

To get these very low interest mortgage rates, buyers must have good to excellent credit scores. Credit scores measure the ability and consistency of a person’s buying and payment habits. They are a complex calculation of various financial data; most people have an average credit score of 723, which is nearly in the 750 to 850 range for excellent credit scores.

Those persons who score below 660 will not be able to take advantage of the lowest interest rate loans on the market. They also will discover that they will be hit with higher fees and other charges for their loans because of their lower credit scores. Fortunately, credit scores can be improved, but it takes time and effort. Making on time payments is most important, and keeping balances below 30% of their account limit is another good move to help improve credit scores.

To take advantage of national mortgage rates that are at near all time lows, buyers should plan a few months ahead to work on improving their credit score. Never miss a payment and try to pay monthly payments as soon as you receive the bill. Do not open new accounts. Do not close old accounts. Bring balances down to or below 30% of the account limit. Find new income sources to lower your debt to income ratio. Never let anyone run your credit report; too many hits (inquiries) for credit applications, loans or insurance will become a negative entry on your report.

Obtain your three free credit reports from www.annualcreditreport.com and go over them carefully. If there are mistakes or errors, write the involved credit reporting agency (Experian, Equifax or Trans Union) and ask for an investigation. If there are adverse entries you may want to include a short explanation why. These moves can help you obtain those desirable low mortgage rates.