The 6% mortgage is here — but here’s how to save

The latest mortgage rates and how homebuyers can save money.

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Mortgage rates continue their upward march, with 30-year fixed-rate mortgages crossing the 6% mark this week, Bankrate data shows. Indeed, the national average for 30-year fixed-rate mortgages reached 6.02% and the national average for 15-year fixed-rate mortgages rose to 5.29%, according to Bankrate data from June 16. . And some pros say rates could go even higher. (see the lowest mortgage rates you can get now here).

So what can you do to save on a mortgage now? If you can afford a 15-year mortgage, rates are lower on those. Another thing to consider is an adjustable rate mortgage (ARM) – but only if that makes sense to you. Indeed, the latest Bankrate data shows that average rates on 5/1 ARMS (rates are fixed for five years and then adjust) are 4.09%.

But note that ARMs tend to make more sense for short-term homeowners who only plan to stay in the same home for 5-7 years. And because rates are becoming variable, “ARMs can be risky and, in the long run, they may end up costing more than a fixed mortgage with a higher initial rate,” said Jacob Channel, senior economics analyst at LendingTree at MarketWatch Picks.

No matter what type of loan you get, experts advise getting quotes from 3-5 lenders and determining some important numbers, like your credit score (improve it if necessary) and debt-to-income ratio ( DTI), both lenders. use to determine the price that will be offered to you. To calculate your DTI, divide your monthly debt payments (mortgage, credit card payments, car, student or personal loans, child support) by your gross monthly income. If the number you exit is 36% or less, your chances of qualifying for a mortgage, and at a better rate, are better than if you exit with a number higher than your DTI.

You can also consider buying cash back points, which are fees paid to lower an interest rate – usually one point lowers the interest rate by approximately 0.25%, although this can vary. “When you pay cashback points, you give the lender a portion of the interest payments up front in exchange for paying less interest each month,” Holden Lewis, real estate and mortgage expert at Nerdwallet, recently told MarketWatch Picks. But note that there may be limits to the number of discount points you can buy, and buying points may not make sense, especially if you don’t plan on staying in the house for long.

And this MarketWatch Picks guide offers eight tips for getting the lowest mortgage rate. One tip: Consider home ownership programs. “With supports such as down payment assistance, funds available for repairs and renovations, interest-free second loans and reduced interest rates, homeownership programs are designed to attract new residents in specific areas. States like California, Florida, Illinois and New York offer programs to help reduce the costs associated with taking out a new mortgage and some states even offer tax credits that can be used on your federal tax return. FHA loans, USDA loans, and VA loans are among the most common types of loans for buyers with lower credit and lower down payments,” reveals MarketWatch Picks.

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