Today’s mortgage and refinance rates: April 7, 2022 | Rates are up after brief pause

Today’s mortgage and refinance rates: April 7, 2022 | Rates are up after brief pause

Though mortgage rates had seemed to calm slightly in the last few days, they’re back up now. Rates have been volatile recently due to economic pressures and geopolitical uncertainty.

“Between inflation rising quickly, the conflict in Ukraine, and new Fed policy, we are going to see instability in mortgage rates throughout the year and that could mean even higher rates,” says Ralph DiBugnara, president of Home Qualified and senior vice president of Cardinal Financial.

Even though rates are up, so are home values. From the start of the pandemic to the end of 2021, the median home price increased over 26%, according to data from the Census Bureau and the Department of Housing and Urban Development, meaning many homeowners gained tens of thousands of dollars in equity in a relatively short period of time.

Since rates are slated to continue increasing throughout 2022, now might be a good time to take advantage of a cash-out refinance to put that equity to work (like using it to fund a home improvement project, for example).

Mortgage rates today

Mortgage refinance rates today

Mortgage calculator

Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.

Click “More details” for tips on how to save money on your mortgage in the long run.

What is a fixed-rate mortgage?

When you get a mortgage, you’ll need to decide what type of rate you want: fixed or adjustable.

A fixed-rate mortgage locks in your rate for the entire length of your mortgage. This means that even if market rates go up or down, yours will stay the same. Fixed-rate mortgages can be beneficial for borrowers looking for stability; though you might miss out if rates trend lower, you don’t have to worry about your monthly payment increasing if rates go up. 

An adjustable-rate mortgage keeps your rate the same for a predetermined amount of time, then changes it periodically. A 5/1 ARM locks in your rate for the first five years, then the rate fluctuates once per year. This is a riskier approach, because you risk your rate going up later. 

Adjustable rates can be attractive because they’re often lower than 30-year fixed rates. If you plan to sell your home or refinance your mortgage before the ARM’s introductory fixed period is over, an ARM might be a good choice for you. Just be sure you understand how much your rate and payment could increase when the intro period is over.

If you’re planning to stay in your home for a long time or just prefer the stability of a fixed monthly payment, a fixed-rate mortgage would likely be a better fit for you.

How are mortgage rates determined?

Mortgage rates are determined by a combination of factors — some you can control, and some you can’t.

The main external factor is the economy. Interest rates tend to be higher when the US economy is thriving and lower when it’s struggling. The two main economic factors that impact mortgage rates are employment and inflation. When employment numbers and inflation go up, mortgage rates tend to increase.

You can control your finances, to a certain extent. The better your credit score, debt-to-income ratio, and down payment, the lower your rate should be.

Finally, your mortgage rate relies on what type of mortgage you get. Government-backed mortgages (like FHA, VA, and USDA mortgages) charge the lowest rates, while jumbo mortgages charge the highest rates. You’ll also get a lower rate with a shorter mortgage term.

How do I choose a mortgage lender?

First, think about what type of mortgage you want. The best mortgage lender will be different for an FHA mortgage than for a VA mortgage.

A lender should be relatively affordable. You shouldn’t need a super high credit score or down payment to get a loan. You also want it to offer good rates and charge reasonable fees.

Once you’re ready to start shopping for homes, apply for preapproval with your top three or four choices. A preapproval letter states that the lender would like to lend you up to a certain amount, at a specific interest rate. With a few preapproval letters in hand, you can compare each lender’s offer.

When you apply for preapproval, a lender does a hard credit inquiry. A bunch of hard inquiries on your report can hurt your credit score — unless it’s for the sake of shopping for the best rate.

If you limit your rate shopping to a month or so, credit bureaus will understand that you’re looking for a home and shouldn’t hold each individual inquiry against you.

Read the original article on Business Insider

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