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It's the fourth week of falling mortgage rates among most of the 16 surveyed national lenders — with five now offering interest rates below 7%. The Yahoo Finance weekly survey ranks lenders by the lowest annual percentage rate (APR), which includes lender fees. Read on to see the lenders with the lowest rates this week.
See our top picks for mortgage lenders for first-time home buyers.
Here are the five mortgage lenders with the best interest rates this week, as determined by our survey of the lowest mortgage rates on 30-year, fixed-rate conventional loans. The following numbers are each lender's annual percentage rate (APR).
The full survey list of 16 national lenders, showing included fees, is in the table below.
Most lenders in this week's survey cut their mortgage rates, with one notable exception. Fifth Third's rate moved slightly higher, but instead of charging a discount point, it offered a lender credit — another minor complication to comparing rates and lenders.
Shopping for a mortgage isn't easy. Our survey works to help you focus on three of the most important factors: 1) the offered interest rate, 2) the rate with fees (APR), and 3) the discount points used to lower a loan rate (or in 5/3's case, a higher rate with a credit).
An APR difference of 0.913 percentage point separated the lowest-priced lender, PenFed Credit Union, from the bottom-ranked New American Funding. Prepaid interest (points) varied from the 0.125 credit of Fifth Third to 2.16 points (Better Mortgage).
These are sample mortgage rates found on lender websites and are based on generic assumptions. Lenders advertise 30-year mortgage rates based on varying credit scores, down payments, and other credit qualifications. Where you live also affects your mortgage rate.
Your rate will be based on your particular credit profile.
If a mortgage lender required additional borrower information to provide a sample rate, we supplied a median home value and credit score, along with a 20% down payment, based on a home in the Midwest.
See the average mortgage rate in your state
The key to securing the lowest mortgage rate is shopping around, which could save borrowers up to an average of $44,000 over the life of a 30-year loan, according to a Realtor.com analysis.
We're also looking for details that you will want to consider. Often, borrowers focus on the offered interest rate, as that's what lenders typically highlight. However, the mortgage annual percentage rate, or APR, is the most important number.
APR includes both the interest rate and lender fees (for example, the mortgage origination fee), so it is the most accurate measure of your annual borrowing costs.
Lenders often include mortgage discount points to lower the interest rate they offer. That's where things can get confusing.
First off, discount points are prepaid interest — an up-front fee paid at closing that reduces your interest rate. Although lenders often include discount points in their advertised rates online, buying points is optional.
Each point represents 1% of your loan amount and generally lowers your interest rate by about 0.25%. For example, one point on a $400,000 mortgage would cost $4,000 and reduce a 6.75% home loan to 6.50%.
Just remember: no matter what the lender puts in an advertised rate or a loan offer, when…
