Today's Mortgage Rate

The current home mortgage rates are excellent, especially for new buyers. The current mortgage interest rate is at its lowest in 12 years. Part of the reason for this is that mortgage rates are pegged to the federal prime interest rates, which also are at all time lows. The best type of home mortgage to get would be one with a fixed interest rate, where you lock in the current home mortgage rate for the length of the agreement. Variable rate mortgages can cause tremendous problems because they go up when the prime rate rises. Since today’s prime rate is so very low, the potential for increasing mortgage payments over time is very high.

Variable rates are risky. If the rates go up even just a little, your mortgage amount could rise dramatically. A fixed rate is dependable because it stays the same no matter what the prime rate does. Ask for a fixed rate comparison; you will notice that the variable rates may be initially lower. But these rates are subject to change over time, and in most cases they will go up.

There are many home loan interest rate options that are affixed to the term of the mortgage. Today, according to Bankrate.com, a 30 year fixed mortgage interest rate is just 4.625%. The rate for a 15 year mortgage is much lower at 3.875%. ARM (adjustable rate mortgage) rates go even lower, to 3.125% for a 3/1 ARM loan. 3/1 refers to the loan being a fixed rate for the first 3 years and then for the balance of the mortgage, the interest is adjustable (variable) and pegged to the prime rate every year. ARM mortgages are offered in many configurations including 7/1 ARM I/O (interest only) loans. ARM mortgages can be arranged to run different time periods from 1 year to 7 years.

Another type of home mortgage rate applies to the HELOC (home equity line of credit) loans. These are more like credit cards than mortgages, but the house is the collateral. You can borrow against your line of credit up to the limit. There are some fees involved and they have an APR that is variable. The HELOC loans are frequently used for making improvements to the home or for debt consolidation. Home refinance mortgage rates are very low today, and if it is possible to get out of a higher interest variable rate mortgage, the consumer is very wise to lock into a lower fixed rate mortgage.

The very best of today’s mortgage rates is one that is a shorter term fixed low rate. This would be a 15 year fixed APR loan, which runs at 3.875% interest (APR) today. To get this type of loan, the borrower must have excellent credit. Having excellent credit is something to take care of long before a person goes out looking for a home mortgage if they want to have one with a low interest rate and lower payments. Being a good borrower and making payments on time every month will earn you lower interest rates.