Mortgage and refinance rates are low overall today. Rates tend to be low when the US economy is struggling, as it has been during the COVID-19 pandemic.
In November, the Federal Reserve announced that it would start tapering asset purchasing, including mortgage-backed assets. In the December meeting, the Fed said that it would taper purchasing at twice the rate than it originally predicted. It also plans to raise the federal funds rate three times in 2022. All of these changes will likely result in higher mortgage rates in 2022.
If you’re financially ready, you may want to lock in a low mortgage rate before rates increase next year.
Today’s mortgage rates
Today’s refinance rates
Mortgage calculator
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.
Is it a good time to buy a house?
The US is a seller’s market right now, meaning there are more buyers than there are homes for sale. Homes are expensive as a result, and bidding wars are competitive. If you don’t have enough money for a down payment on a home you like, it might not be the best time to buy a home.
However, it may be a good time if you are financially prepared to put money down and take on monthly payments. Mortgage rates are still at all-time lows, so you could save money on interest by buying now rather than waiting until rates increase.
Is now a good time to refinance?
It depends on your situation — but in general, yes, this is a good time to refinance your mortgage. Refinance rates are at all-time lows. If you can lock in a significantly lower rate by refinancing, you may want to do so.
Keep in mind that refinancing will probably only be worth the effort if you plan to stay on the home for at least a few more years. You’ll pay closing costs when you refinance, so you want to stay in the home long enough that the amount you’ll save in interest exceeds the amount you pay at closing. Otherwise, you could lose money by refinancing.
How do I get the lowest refinance rate?
Securing the lowest refinance rate possible breaks down into three main categories:
- Home equity: Most lenders require you to have at least 20% equity in your home to refinance — but if you have even more equity, you could be rewarded with a lower rate. You can find ways to either increase your home’s value (like with home improvements) or make extra payments to have more equity in your house.
- Credit score: The higher your credit score, the lower your interest rate could be. Check your credit report or use a free website like Credit Karma to see what needs improving for your score to go up.
- Debt-to-income ratio: Your DTI ratio is the amount you pay toward debts each month, divided by your gross monthly income. Most refinance lenders want to see a DTI ratio of 36% or less, but the lower your ratio, the better your rate will be. You can either find ways to earn more money or pay down debts to decrease your ratio.
Improving in these three categories will help you land the best refinance rate, which could lead to a great time to refinance your mortgage.
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