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No change in December 15 mortgage rates for 15- and 30-year terms

An amortization schedule, which details your payment schedule throughout the loan, is usually provided to you after you get a mortgage.

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Mortgage Rates: As of December 15, the interest rate on a 30-year fixed-rate mortgage remains 6.375%, unaltered from the previous day. A 15-year fixed-rate mortgage also has an interest rate of 5.750%, which hasn’t changed from yesterday.

Checking the current rate before applying for a loan is a good idea because mortgage rates fluctuate daily. To make sure you get the best deal, it’s also critical to compare the current interest rates, terms, and fees offered by various lenders.

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The last update of rates was on December 15, 2023. The assumptions are displayed here, and the rates are based in Texas. The real rates might be different. With 5,000 Trustpilot reviews and an average star rating of 4.7 (out of 5.0), Credible is a personal finance marketplace.

How do interest rates on mortgages operate?

You are borrowing money from a lender when you take out a mortgage loan to buy a house. That lender will charge interest on the principal, or the amount you borrowed, to turn a profit and lower its own risk.

A mortgage rate is simply the cost of borrowing money expressed as a percentage. Your credit score, debt-to-income ratio (DTI), down payment, loan amount, and repayment period are just a few of the variables that may affect it.

An amortization schedule, which details your payment schedule throughout the loan, is usually provided to you after you get a mortgage. Additionally, it shows the percentage of each payment that goes toward principal as opposed to interest.

You’ll pay more for interest near the start of the loan term and less for the principal balance. You’ll pay more toward principal and less toward interest as the repayment period draws to a close.

You have the option of an adjustable or fixed mortgage interest rate. The rate on a fixed-rate mortgage won’t change throughout the loan. The interest rate on an adjustable-rate mortgage (ARM) is subject to market fluctuations.

Remember that the interest rate on a mortgage is not the same as the annual percentage rate (APR). For this reason, an APR comprises the interest rate in addition to any other costs or fees imposed by the lender.

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Mortgage rates fluctuate regularly, sometimes even every day. Inflation is the main cause of these variations. When inflation is high, interest rates typically increase; when inflation is low, they typically decrease or stay mostly unchanged. The state of the economy, supply, and demand are a few more variables that may affect the average mortgage rate as it stands today.

Use Credible’s secure website to view current mortgage rates from several lenders without affecting your credit score if you’re looking for great rates. To get an idea of your monthly mortgage payments, you can also use Credible’s mortgage calculator.

How is the mortgage rate determined?

Mortgage lenders typically decide the interest rate on a case-by-case basis. Low-risk borrowers, or those with a higher credit score, income, and down payment amount, typically get the lowest rates. The following additional individual variables could also impact your mortgage rate:

  • Location of the home
  • Price of the home
  • Your credit score and credit history
  • Loan term
  • Loan type (e.g., conventional or FHA)
  • Interest rate type (fixed or adjustable)
  • Down payment amount
  • Loan-to-value (LTV) ratio
  • DTI

Other indirect factors that may determine the mortgage rate include:

  • Current economic conditions
  • Rate of inflation
  • Market conditions
  • Housing construction supply, demand, and costs
  • Consumer spending
  • Stock market
  • 10-year Treasury yields
  • Federal Reserve policies
  • Current employment rate

How to evaluate Mortgage Rates

Your mortgage rate may be influenced by the lender you select in addition to specific financial and individual factors. All lenders have different average mortgage rates, so it doesn’t matter what your credit score is or how much money you have. For this reason, comparing lenders and loan offers is crucial.

To make sure you get the best mortgage rate, here are some of the best ways to compare them:

  • Look around for a lender: To discover the best deals and lowest fees, compare several lenders. Throughout the loan, you may still save thousands of dollars even if the rate is lowered by a few basis points.
  • Obtain multiple loan estimates: A more customized rate and fees based on variables like income, employment, and the location of the property are included in a loan estimate. Examine and contrast several lenders’ loan estimates.
  • Get a mortgage preapproval: Although being pre-approved does not ensure that you will be granted a loan, it can help you determine what you are eligible for and at what interest rate. You will have to fill out an application and have your credit checked thoroughly.
  • Have a look at a mortgage rate lock: With a mortgage rate lock, you can fix the current mortgage rate for a predetermined time, usually 30 to 90 days. You can keep looking for a house during this time without having to worry about the rate fluctuating.
  • Select a fixed-rate mortgage or an adjustable-rate mortgage. Think carefully about your options because the type of interest rate you choose can impact your overall payment amount

Using a mortgage calculator is an additional method of comparing mortgage rates. Calculate the total cost of the loan and your monthly payment amount using a calculator. Just keep in mind that some costs, such as taxes or homeowners insurance, might not be factored into the calculations.

Here is a basic illustration of the differences between a 30-year fixed-rate mortgage and a 15-year fixed-rate mortgage:

15-year fixed-rate

  • Loan amount: $300,000
  • Interest rate: 6.29%
  • Monthly payment: $2,579
  • Total interest charges: $164,186
  • Total loan amount: $464,186

30-year fixed-rate

  • Loan amount: $300,000
  • Interest rate: 6.89%
  • Monthly payment: $1,974
  • Total interest charges: $410,566
  • Total loan amount: $710,565

Mortgage benefits and drawbacks

The following advantages should be taken into account if you’re considering getting a mortgage:

  • Consistent monthly payments: Fixed-rate mortgage loans have an interest rate that is predetermined and stays the same for the duration of the loan. This translates into more reliable monthly payments.
  • Potentially low-interest rates: You may be able to obtain a competitive interest rate if you have good credit and make a sizable down payment. In comparison to fixed-rate loans, adjustable-rate mortgages could have a lower initial interest rate.
  • Tax advantages: Having a mortgage may qualify you for an interest deduction on your mortgage, among other tax advantages.
  • Potential asset: Property is frequently seen as a valuable resource. You can accumulate home equity as you pay off your loan and utilize it for other purposes, such as debt consolidation or home renovations.
  • Credit score boost: You can raise your credit score by making on-time payments.
    And these are a few of the main drawbacks of obtaining a mortgage:
  • Exorbitant fees and interest: For the loan, you may have to pay thousands of dollars in interest and other fees. In addition, you will be in charge of homeowners insurance, property taxes, and maintenance.
  • Long-term debt: Getting a mortgage requires a significant outlay of funds. Loan terms of 10, 15, 20, and 30 years are typical.
  • Possible rate adjustments: The interest rate may go up if you receive an adjustable rate.

How to be eligible for a home loan

Lender requirements differ, but the general procedures to be eligible for a mortgage are as follows:

  • Have a reliable source of income: When applying for a home loan, you’ll need to show proof of your income. This could be earnings from a regular job, commissions, military benefits, alimony, or Social Security benefits. Additionally, documentation of at least two years of employment at your current employer might be required.
  • Examine any available resources: When determining whether to give you a loan, lenders take your assets into account. Money in your bank account or investment accounts are examples of common assets.
  • Recognize your DTI: Installment loans, credit card debt, and rent are examples of monthly debts. Your DTI is the percentage of your gross monthly income that is applied to these obligations. Your chances of being approved are better the lower your DTI.
  • Verify your credit rating: To secure the most favorable mortgage rate, you must possess excellent credit. Nevertheless, the minimum credit score required for each type of loan varies. For example, to be eligible for an FHA loan with a 3.5% down payment, your credit score must be at least 580.
  • Recognize the type of property: You might be asked to indicate whether the house you wish to purchase will serve as your primary residence during the loan application process. Compared to acquiring a secondary or investment property, lenders may be more accommodating when it comes to requirements for primary residences since they are typically seen as less risky.
  • Select the kind of loan: There are numerous varieties of mortgage loans available, such as FHA, VA, USDA, conventional, and jumbo loans. Choose the option that best fits your needs after giving it some thought.
  • Be ready for closing and upfront expenses: There might be a down payment required, depending on the type of loan. The lender and loan type will determine the precise amount. For qualified buyers, there is no minimum down payment needed for a USDA loan, for instance. You must make a 20% down payment on a conventional loan to avoid paying private mortgage insurance (PMI). Any closing costs may also be your responsibility when you sign the loan.

Methods for applying to mortgages

The basic steps for applying for a mortgage are as follows, along with an outline of what to expect at each stage:

  • Select a lender: Examine the terms of repayment, fees, average mortgage rates, loan types, and other details from multiple lenders by comparing them. Additionally, find out if they provide closing cost credits or programs for down payment assistance.
  • Obtain prior approval: To increase the likelihood that you will acquire your ideal home, finish the pre-approval process. Documents required are- your identity, employment, income, assets, and debts.
  • Fill out an official application: Apply online or in-person to the lender of your choice, providing the necessary documentation.
  • Await the loan’s processing from the lender: The lender may need some time to consider your application and reach a determination. They might occasionally ask for more details regarding your debts, assets, and income. To avoid delays, please provide this information as soon as you can.
  • Finish the closing procedure: You will get a closing disclosure with details on the loan and any closing costs if your loan application is approved. Examine it, sign the final loan documents, and pay the closing costs and down payment. While some lenders allow you to close online, others demand that you visit in person. If you are denied, you can speak with your lender to find out more details and figure out how to resolve any problems.

How a mortgage is refinanced

You can exchange your existing loan for a new one by refinancing your mortgage. It excludes obtaining a second loan. Additionally, you will still be in charge of paying back the refinanced loan.

Refinancing your mortgage might be a good idea if you:

  • Desire a different kind of rate or a lower interest rate
  • seek a shorter loan repayment period to complete the loan sooner
  • Require a lower monthly installment
  • Wish to have your loan’s PMI removed
  • Need to utilize the equity for debt consolidation (cash-out refinancing) or home improvement

The procedure you go through for the first loan is comparable to the refinancing process. The basic steps are as follows:

  • Choose the type of refinancing you want.
  • Compare lenders for the best rates.
  • Complete the application process.
  • Wait for the lender to review your application.
  • Provide supporting documentation (if requested).
  • Complete the home appraisal.
  • Proceed to close, review the loan documents, and pay any closing costs.
Farheen Ashraf
Farheen Ashraf
Farheen Ashraf is a History graduate. She writes on a variety of topics, including business, entertainment, laws, poetry, stories, travel, and more. Her passion for writing has led her to explore a variety of genres.

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