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Mortgage rates are falling but it’s still worth searching for the best deal

Mortgage rates are falling but it’s still worth searching for the best deal

Mortgage rates are falling but it’s still worth searching for the best deal

After climbing for much of 2018, mortgage rates have been falling since the beginning of the year. The average mortgage APR (annual percentage rate) was recently at 4.28 percent, according to Freddie Mac, compared to a high of 5 percent in 2018.

But just because rates are down doesn’t mean you’re getting a good deal.

“Many homebuyers get intimidated by the mortgage proce and just go with whatever is easiest—usually what their local bank is offering,” says Greg McBride, chief financial analyst for Bankrate. “Smart buyers shop around to uncover the lowest offers.”

When we shopped around, we found lower rates at various banks. HSBC Bank, for instance, is offering a 30-year fixed-rate mortgage, with an APR of 4.03 percent. Wells Fargo offers an APR of 3.98 percent.

Here are the steps you should take to find the lowest-priced loan available.

Choose a Fixed or Adjustable Rate Loan

If you’re planning to stay in your home for at least a decade, a 30-year fixed rate loan—with relatively low monthly payments—is your best bet.

If you can afford higher payments and want to dispense with the debt sooner, consider a 15-year fixed. It features a lower interest rate and could save you thousands over the life of the loan.

Another option is to choose a shorter-term adjustable rate mortgage (ARM). These mortgages feature lower rates for an introductory period, then a higher rate. On a 7/1 ARM, for example, the rate remains fixed for seven years. After that period, it can adjust annually based on market rates but can only increase a maximum of 5 percentage points above the rate.

If you’re planning to be in your home for years to come, this may not be the best option, especially since fixed rates are attractive now. (more…)

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