Who Has The Best Mortgage Rates?
If you want to find the best mortgage rate, it helps to know where to start looking.
We analyzed the data of the 40 largest lenders in 2020 and looked for the lowest interest rates and fees
These lenders topped the list of the best 30-year mortgage rates:
Freedom MortgageBetter MortgageCitibankGuild Mortgage CompanyAmerican Financial Network
Remember that prices vary widely from person to person.
Your own interest rate will depend on factors like your down payment and the loan term – so there is a good chance your best interest rate will come from a company not listed above.
Fortunately, interest rates are currently at historic lows. It's a good time to buy your best deal.
Find and lock a low mortgage rate (June 10, 2021)
In this article (continue to …)
How to Find Your Lowest Mortgage Rate
Mortgage rates are very personal. Factors like your creditworthiness and the debt to income ratio have a huge impact on the rate you will receive.
This means that the company with the lowest average rates may not always be the cheapest lender for everyone.
For example: Of the 40 mortgage lenders in our study, Freedom Mortgage had the lowest average mortgage rate in 2020 at just 2.92% for a 30-year loan.
But average prices only tell part of the story. Overall, Freedom Mortgage rates ranged from under 2% to over 6%. So some people have much lower prices than others.
To find your best deal, you need to obtain and compare credit estimates from more than one company.
Check Your Mortgage Rates (June 10, 2021)
Best Mortgage Rates From Top Lenders
We looked at the top 40 largest mortgage lenders in 2020 to see how their interest rates stack up.
The 25 companies with the best average mortgage rates are:
Mortgage lender30-year average interest rate, 20202Freedom Mortgage2.92% Better Mortgage3.03% Citibank3.05% Guild Mortgage Co.3.15% American Financial Network3.16% LoanDepot3.17% Guaranteed Rate3.17% Cross-Country Mortgage3.17% Prosperity Home Mortgage3.17% Homepoint3 .18% New American Funding3.18% Bank of America3.19% Rocket Mortgage 3.20% Supreme Lending3.20% American Pacific3.21% Primary Residential Mortgage3.21% Gateway Mortgage Group3.22% Stearns Lending3.23 % Movement Mortgage3. 24% Academy Mortgage Corp.3.24% Caliber Home Loans3.25% Paramount Residential Mortgage Group3.25% Finance of America3.26% LendUS3.26% Citizens Bank3.27%
Note that the average rates shown in this table are from 2020, when rates have been near record lows for most of the year. Today's mortgage rates could be higher than advertised.
You can still use last year's interest rates as a tool to compare lenders side by side and see how they perform.
Before getting any loan, however, you should get tailored interest rates from a few different lenders to ensure you are getting the best rate available today.
Which mortgage lender has the lowest closing costs?
The closing costs are on average around 2 – 5% of the loan amount. That's over $ 4,000 on a $ 200,000 loan – a sizable amount of cash.
Just like with mortgage rates, you can look for the lowest closing costs to minimize your out-of-pocket expenses.
Here's how the top mortgage lenders compare the total cost of credit according to the data from HMDA for 2020.
Mortgage lenderAverage total loan cost, 2020
(in% of the average loan amount) 2Example: upfront costs for a
$ 250,000 mortgageSupreme Lending0.64% $ 1,612 Citibank 0.83% $ 2,070 PNC 0.90% $ 2,248 Chase0.99% $ 2,470 Better Mortgage1.04% 2,612Wells Fargo1.20% $ 2,992 Gateway Mortgage Group1.26% $ 3,153 Guaranteed Rate1 .35% $ 3,371 Bank of America1. 40% $ 3.504Flagstar Bank1.41% $ 3.531Prosperity Home Mortgage, LLC1.47% $ 3.680LendUS LLC1.52% $ 3.789Homepoint1.53% $ 3.835loanDepot1.54% $ 3.855Freedom Mortgage1.55% $ 3.876Northpointe Bank1.56% $ 3.892 .Finance of America1.56% $ 3.892. 56% $ 3,902US Bank1.64% $ 4,102Citizens Bank1.64% $ 4,103Sierra Pacific Mortgage1.65% $ 4,114American Pacific1.68% $ 4,201Fairway Independent1.75% $ 4,369Bay Equity LLC1.75% $ 4,377Caliber Home Loans1.75% $ 4,382Movement Mortgage1 0.79% $ 4,481
When shopping, be aware that some closing costs cannot be negotiated because they are set by a third party (e.g., valuation and credit report fees).
However, lenders have leeway when it comes to setting their own fees. So if you get multiple quotes, you may have some leverage to negotiate your costs down.
Some homebuyers even require the seller to pay some or all of their closing costs. However, this is not a guarantee, so you should still plan for these expenses in advance.
Compare loan offers from top lenders (06/10/2021)
Which is more important: a low mortgage rate or low fees?
Comparing the cost of borrowing upfront is just as important as comparing the mortgage rates.
Your interest rate seems to be much more important as it is with you for the life of the loan. But upfront fees can make a huge difference – especially if you've only been in the house for a few years.
Remember that most people who get a 30 year mortgage will not keep their loan for the full 30 years. In fact, homeowners only keep loans for an average of 7 years with a 30 year maturity.
If you only pay interest for a short period of time, these upfront fees start to weigh more heavily than your interest rate.
Lenders can highlight either low closing costs or low interest rates to make one offer look more attractive while increasing the other number.
Additionally, lenders sometimes emphasize a number or two to make an offer look more attractive than it is.
For example, lenders may advertise low or no fee mortgages and say they'll pay the upfront cost for you. But these loans usually have a higher interest rate.
Other lenders may value extremely low interest rates but charge higher issuance fees to make up for it.
So when you buy a mortgage, read your interest rate offers carefully. Review pricing, upfront fees, and your estimated total closing cost to make sure you're getting the best deal overall.
Find Your Lowest Mortgage Rate (June 10, 2021)
How to Buy Mortgage Interest
Shopping for the best mortgage rate – and the lowest fees – is easy enough when you know what you are doing. There are five basic steps:
Work on your credit and budget to get the best deal possible. Find out which one Type of mortgage loan Find Lenders Who Offer The Type Of Loan You Want Choose your preferred lender based on the rates advertised, recommendations, and customer ratings Expert reviewsRequest credit estimates ("Offers") from these lenders and compare the rates and fees in each offer
The final step – comparing the credit estimates – is key to finding the best mortgage rate and the cheapest overall mortgage.
How to Read Your Credit Estimates
A credit estimate (LE) is a standard document that you receive from a lender after completing a mortgage application.
The LE lists everything you need to know about a mortgage before signing up, including the interest rate, lender fees, loan duration, repayment terms, and more.
By comparing multiple loan estimates side by side, you can instantly determine which lender is offering you the cheapest home loan.
Example of a credit estimate, page 1. Image: CFPB
The first page of the loan estimate (see above) clearly states your mortgage interest rate and the expected monthly payment.
These are the numbers that people look to most when buying a home loan.
But the interest rate isn't the only thing worth looking at.
You should also compare the estimated closing costs for each lender and the closing cost breakdown on page 2.
Example of a credit estimate, page 2. Image: CFPB
Find the best price and fee combination
The best mortgage rate alone does not end up making the best offer.
Your interest rate and the closing costs must both be taken into account. Their relative weight will depend on your financial goals and how long you plan to stay in the house.
For example, if you only own the house for a few years, a higher rate but lower upfront costs may make sense.
But if you're keeping the full 30 year loan term, you probably want the lowest interest rate. In this case, you may accept a slightly higher upfront cost for a lower price.
Looking at your annual percentage rate (APR) can often help you compare the total cost of a loan, since the annual percentage rate includes interest and loan fees.
Find Your Lowest Mortgage Rate (June 10, 2021)
Tips for the lowest mortgage rate
If you want the lowest mortgage rate available, you need to shop around. That's rule number one.
However, there are other strategies that you can use to get lower quotes from the lenders you speak to.
Try a last minute loan boost. See what you can do improve your credit before you buy or refinance. Your credit score makes a huge difference in your mortgage rate and if you improve it by a few points, you can see real savingsConsider discount points. If you can afford it, you can pay more upfront for a better mortgage rate during the life of the loan. This can be useful if you plan to keep your home for a long time. Discount points Cost 1% of the loan amount and typically lower your interest rate by 0.25%Negotiate your price. Negotiating with a lender may sound intimidating, but trust us when we say it can be done. Mortgage lenders have flexibility in the interest rates they offer and want your business. A lower interest rate from another company may be the only leverage you need negotiate a better deal with the lender you wantNegotiate your closing costs. Some closing costs are non-negotiable, such as B. Third party valuation and credit report fees. But the fees that your lender charges can sometimes be negotiated to save money on the front endKnow when to lock your tariff. Mortgage rates move up and down every day. If you want to get the lowest possible price, keep an eye out Daily price movements and be ready for a rate lock if they drop
Getting mortgage offers may not be the most pleasant way to spend a day. But a few hours of exertion could save you thousands in the long run.
One study found that people who compare just three lenders save an average of $ 300 a year. And if you are a savvy shopper, you can save a lot more.
Does my deposit affect my tariff?
A larger down payment can help you qualify for low mortgage rates.
For example, traditional loans only require 3% less. But if you can save 20%, get a better rate and avoid private mortgage insurance (PMI). Your loan will cost a lot less overall.
With government mortgage programs – like FHA, VA, and USDA loans – your down payment amount doesn't have that much of an impact on your interest rate.
While a large down payment can lower your mortgage rate, it doesn't always make sense to save for a 20% down payment.
Keeping most of your savings at home will put you in distress when there are emergency costs. It can also result in new home buyers spending little money on repairs and home improvement projects that are sure to be pending.
It often makes sense to make a smaller down payment and take out a higher rate and / or mortgage insurance. This gets you in a home and lets you start building equity sooner.
Then in a few years, you could potentially be able to refinance yourself at a lower interest rate and without mortgage insurance.
Confirm eligibility to buy a house (June 10, 2021)
Other factors that affect your mortgage rates
There are many different variables that affect the mortgage rates on offer.
You have little to no control over some of these factors. For example, no one expected a coronavirus pandemic to lower mortgage rates in 2020.
In other years, economic forces urge the Federal Reserve to raise lending rates.
And while the Fed doesn't control mortgage rates, banks and credit unions offer mortgage and refinance rates that reflect the broader interest rate market.
Since you cannot control everything, it is important to know what factors you can change when applying for a loan. This includes things like:
Your credit score and your report: Credit repair takes time, but any point in your credit score can help. If possible, pay off your credit cards to around 30% of the credit line before applying for a new home loan. Borrowers with excellent credit get the best interest ratesYour debt-to-income ratio: Lenders look at how much you owe in other monthly payments compared to your income to see how much a new home loan would affect your budget. A debt-to-income ratio of over 45% could be a cause for concern for lenders. If possible, pay off some existing loans to improve your debt-to-income ratioYour repayment term: Short term loans like a 15 year mortgage usually offer lower interest rates than 30 year mortgagesYour tariff type: Variable rate mortgages advertise lower interest rates than fixed rate mortgages. But when the introductory ARM rate expires, your interest rate and monthly payments can go upThe price of your home: Knowing your price range will keep your debt-to-income ratio on track and open up more types of mortgages – especially for first-time home buyers. Use a Mortgage calculator Experiment with different loan amounts to find your price range Your deposit or equity: When buying a home, you can get a lower interest rate with a higher down payment. With a mortgage refinance, the amount of home equity you have built can also affect your interest rate
If you can improve your financial situation in all or most of these areas, you will have access to some of the cheapest loans on the market.
Your Monthly Mortgage Payment: More Than An Interest Rate
Often times, homebuyers think of interest rates when buying a home loan. But interest is only part of the puzzle.
Your total mortgage payment will also include the following costs:
Property taxes: Cities and counties levy property taxes every year. Home buyers often split these annual payments into 12 monthly installmentsHomeowner Insurance: These annual costs can also be added to your monthly payment on a pro-rata basisPMI or MIP: Unless you opt out of a traditional loan by 20%, you will need to add mortgage insurance to your monthly payments. This can be private mortgage insurance (for a conventional loan) or a mortgage insurance premium (for an FHA loan). Mortgage insurance usually adds around 1% of your loan balance to your payments every year
If you live in a condominium or planned housing unit, you are also responsible for HOA fees each month.
When calculating how much home you can afford, consider these additional costs so that you can plan carefully.
Mortgage rates by loan type
Different types of mortgage loans have different interest rates.
To choose the right type of loan for you, you need to think about your loan, down payment, home price, and location.
FHA loan: The Federal Housing Administration requires a credit score of 580 and at least 3.5% less for an FHA loan. FHA interest rates are typically low, but mortgage insurance premiums increase your monthly paymentUSDA loan: The US Department of Agriculture supports mortgage loans for low and middle income borrowers in rural areas. No down payment is required, loan requirements usually start at 640, and USDA interest rates are often below the marketVA loan: Many service members and veterans can qualify for a VA loan that is supported by the Department of Veterans Affairs. VA loans don't offer a down payment without a PMI, and these mortgages typically have the lowest interest rates on the marketConventional Loans: With a compliant or conventional mortgage, your interest rate is tied directly to your credit rating and down payment. Only a FICO score of 620 and a minus of 3% are required, but borrowers with a minus of 20% and a score of over 720 will get the best mortgage ratesJumbo Loans: You need a jumbo loan to buy high quality property. These loans exceed usual credit limits and usually require a 10-20% reduction (although some lenders go as much as 5%). The interest rates on jumbo loans for borrowers with good credit are often similar to conventional loan rates
Not all lenders offer a full range of loan options. And not every type of loan works for all properties. For example, you cannot use an FHA loan or VA loan to buy a vacation home or rental property.
If you are unsure which loan is best for you, speak to a loan officer or mortgage broker about your options.
Along with mortgage rates, ask about the likely requirements and the short and long term costs of each type of loan.
What are the current mortgage rates?
Current mortgage rates are still at all-time lows, which offers good deals for home buyers and homeowners alike.
Comparing loan offers from different lenders is critical to finding the best interest rate. But rate shopping is only part of the home buying process.
Finding the right type of loan – and saving you money on closing costs and other fees – can help you lower your overall loan costs.
When buying a mortgage, pay attention to fees, loan terms, and long-term borrowing costs and interest rates. This is the surest way to save money on your new home loan.
Confirm your new price (June 10, 2021)
1Top 40 Lenders for 2020 from S&P Global, HousingWire, and Scotsman Guide.
Interest and fee data comes from self-reported credit data that all mortgage lenders are required to submit each year under the Home Mortgage Disclosure Act. The averages include all 30-year loans reported by each lender for the previous year. Your own interest rate and your borrowing costs will vary.