Mortgage Rates Hit 5-Month Low. Why Yours Will Probably Be Higher

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Mortgage rates dropped to 2.88% last week – the lowest they’ve been since mid-February this year. But if you’re buying a home or looking to refinance, the lowest rates you see are not what you’ll likely get.

That attention-grabbing 2.88% rate is the average 30-year fixed mortgage rate according to Freddie Mac, which publishes weekly average rate benchmarks that experts describe as an industry standard for tracking rate movement. Individual mortgage lenders also commonly advertise low interest rates on their websites.

But for buyers and refinancers, the industry standard and lender advertisements matter much less than individual circumstances.

It’s not to say average mortgage rates aren’t useful. They can be a helpful point of reference for what rate your personal circumstances might qualify you for. In other words, someone whose financial situation hasn’t drastically changed will likely qualify for a lower rate today than they would have earlier in the year when average 30-year rates were 0.30% higher.

But there is so much that goes into your interest rate that it’s effectively impossible to know what your mortgage or refinance rate will be without submitting an application and having a lender review your information. 

Even then, until and unless your rate quote is locked, it could change. “The market has been incredibly volatile, so something that you are quoted on Monday very well may not be there on Tuesday,” says Jennifer Beeston, a mortgage educator and lender licensed in 46 states. 

For all the attention average interest rates get, there are more important factors for borrowers to consider when it comes to locking in the mortgage that makes sense for you. What looks like a great rate at first pass could be saddled with thousands of dollars in extra fees with an actual loan. 

Here’s what you need to know about what goes into your mortgage rate and how to ensure you’re getting the best deal.

What You Should Know About Getting the Best Rate

1. Your personal situation matters

Personal factors influence the mortgage or refinance rates you can qualify for. Your credit score and the size of your down payment heavily influence what your rate will be. But even if you have the exact same credit score and down payment as someone else, you won’t both be quoted the same rate. The type of mortgage, the type of property, the repayment term, the size of the loan, and even where you’re purchasing a home may come into play.

So until a lender knows all of your relevant financial information and the details of the home you want to buy, you’re not looking at an interest rate specific to you.

What buyers can do

Take the time to review your credit reports for inaccuracies and build up your…

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