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How much house can you afford calculator | CNET

How much house can you afford calculator | CNET

CNET's mortgage calculator can help you figure out how you can affording when searching for a new house. Our calculator works by collecting some basic financial information, layering in some regional home sales data and calculating an estimated monthly mortgage payment. (Note that the information collected is used only to calculate your monthly mortgage payment -- and not for marketing or ad-targeting purposes.) 

This home mortgage calculator can only provide you with an estimate -- your actual monthly mortgage payment (and other related costs) will depend on your specific financial situation, the property, your state of residence and your lender's terms and conditions.

How our mortgage affordability calculator works

This calculator uses your ZIP code to estimate a property tax rate, and your credit score to estimate a mortgage interest rate. It uses your monthly income and your current monthly debt payments to calculate the monthly payments you can afford to stay under a target debt-to-income ratio. Finally, the calculator subtracts your other estimated monthly expenses, such as property taxes and homeowners insurance, to determine your monthly housing budget -- and the total home price you can afford. 

The formula used is: Monthly payment = (income x DTI) - debts - tax - insurance.

If you want to figure out how much your monthly payment will be instead, check our our mortgage calculator.

How much home can I afford?

You can quickly gauge how much you can safely spend on a mortgage and other debts by using the 28/36 rule. Not only can this rule give you insight into your overall financial health, but many lenders use it to determine whether you're a good loan candidate.

So what is the 28/36 rule? This simple rule of thumb says that you should spend a maximum of 28% of your gross monthly income -- that's your salary before any taxes or deductions come out -- on housing-related expenses -- such as your mortgage payment, principal, interest, taxes, private mortgage insurance (PMI) and homeowners dues.

 This rule also says that you should keep all of your household debt under 36% of your gross monthly income. That includes your mortgage,  credit card payments, car loans and student loans.

For example, if you make $5,000 per month (before taxes), using the 28% rule, you could safely spend up to $1,400 on your housing expenses. You should also aim to keep your total monthly household debt under $1,800 (or 36% of your pay).

Of course, these amounts are the upper limits of what you should plan on spending -- if possible keep these costs under the 28/36 thresholds.

What's my debt-to-income ratio?

Your debt-to-income ratio (DTI) shows lenders how much you make each month compared to how much you spend on debt. This figure helps lenders assess your financial health and when evaluating your loan application.

To calculate your DTI, you'll divide your monthly debt payments -- loans, credit cards, alimony and child support -- by your gross monthly income to get your DTI percentage. If you're applying with your spouse, include both of your incomes and debts in this calculation.

To qualify for a mortgage, try to keep your DTI as low as possible. Most lenders prefer borrowers with a DTI of 36% or less.

For example, let's say that you earn $5,000 per month and these are your monthly expenses: 

• Credit card payment: $250
• Student loan payment: $500
  
• Car loan: $250
  
• House payment: $1,000
• Total: $2,000

From there, you'd divide your monthly expenses ($2,000) by your monthly income ($5,000), giving you a 40% DTI. While this might qualify you for a mortgage with some lenders,  paying down some of your deb could help lower your DTI, making your mortgage application more attractive to lenders. A lower DTI could also help you qualify for a better mortgage rate, saving you thousands in interest.

Don't forget down payments, closing costs, mortgage insurance and other fees

This affordability calculator can help you determine how much of a home you can afford, but that doesn't mean you should look for homes for the maximum amount in your price range. Buying a home comes along with many upfront costs that you'll want to consider when shopping for a home.

• Down payment: Depending on your loan type, expect to pay between 3% to 20% upfront. If you secure a USDA or VA loan, you may be exempt from providing a down payment.
• Closing costs: When you close on your new home, you'll likely have closing costs ranging from 2% to 5% of your total mortgage amount. Your closing costs typically include taxes, home appraisals, inspections, attorney fees, title insurance and other miscellaneous fees.
  
• Mortgage insurance: When you put less than 20% down on a home, you'll be required to purchase a form of mortgage insurance. Conventional loans require private mortgage insurance (PMI) and FHA loans require a mortgage insurance premium (MIP) -- both which have upfront and annual costs.
  
• Guarantee, funding or origination fees: USDA loans require an upfront and annual guarantee fee, while VA loans require an origination fee. Other conventional loans might also require processing or origination fees.
  

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How much house can I afford with an FHA loan? 

With an FHA loan, you'll need to put at least 3.5% of the home price down at closing if your credit score is 580 or higher. If your score is lower than 580, you'll need to put at least 10% down. 

When putting down less than 20% with an FHA loan, you'll also be required to purchase a mortgage insurance premium (MIP). This has two costs -- an upfront fee and recurring monthly charge. The upfront fee is currently 1.75% of your home loan amount. Your annual percentage rate will vary depending on your home price, loan-to-value ratio (mortgage balance divided by your appraised home value) and your loan terms. Currently rates range from 0.45% to 1.05% and will be divided evenly into monthly payments you'll pay along with your home loan.

An example of what you'll pay with an FHA loan

Let's say you use the calculator to determine you can afford a home up to $275,000. Using this price, if your credit score is 580 or higher, you'll need $9,625 for your down payment with an FHA loan. If your credit score is below 580, you'll need to put $27,500 down at closing. 

If your credit score is a 600, you'll need to put $9,625 down and take out the remaining $265,375 as a loan. In this scenario, your upfront MIP payment would be approximately $4,644 and if your annual MIP rate would be 0.85%. This means, your first year's MIP would be $2,255.69, divided into 12 monthly payments of $187.97.

Assuming your closing costs are 3% of your home loan, you'll need another $5,307.50 at closing. All in, you'll need $19,576.50 at closing and not just the $9k down payment.

Upfront costs 

• Down payment  - $9,625
• Upfront MIP fee - $4,644
• Closing costs - $5,307.50
• Total closing costs - $19,576.50

You can learn more about FHA loans here.

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How much house can I afford with a USDA loan? 

One of the main benefits of a USDA loan is that it doesn't require a down payment, making it easier for manyto become a homeowner. However, USDA loans have strict criteria you'll need to meet to qualify -- including living in a USDA-designated area and not exceeding the income threshold for that area. You'll also need to have a DTI under 41% and a monthly mortgage payment that doesn't exceed 29% of your monthly income.

An example of what you'll pay with a USDA loan

Let's assume that you've used the mortgage calculator and found that you can afford a $275,000 home. Although you won't need a down payment, you will need to take out mortgage insurance. This equates to an upfront fee of 1% of your loan amount (due at closing), as well as an annual payment of 0.35% of your loan amount (paid monthly with your mortgage). 

In this example, your upfront fee would be $2,750, and your annual payment would be $962.50, split into monthly payments of $80.21.

Finally, since USDA loan closing costs typically run between 3-6% of the purchase price, let's say yours is 4.5% (or $12,375). Altogether, that's an upfront cost of $15,1258 -- with no down payment.

Upfront costs 

• Down payment  - $0
• Upfront MIP fee - $2,750
• Closing costs - $12,375
• Total closing costs - $15,125

You can learn more about USDA loans here.

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How much house can I afford with a VA loan? 

Available to current or former US military members, VA loans are backed by the US Department of Veterans Affairs. Like USDA loans, VA loans are especially attractive to low-income home buyers since they don't require a down payment. To qualify, you or your spouse must be a veteran or active duty service member, and your property needs to meet VA loan requirements. For example, it can't be a fixer-upper or a secondary/vacation home.

An example of what you'll pay with a VA loan

Let's say that the mortgage calculator determined that you can spend as much as $275,000 on a home. Since you're taking out a VA loan, you won't need to put anything down or pay for mortgage insurance. 

However, you will need to pay a one-time VA funding fee at closing. This fee can be rolled into the loan amount and paid monthly, but we'll include it as an upfront cost in this example. If you put 0% down, the fee is 2.3% for first-time VA loans and 3.6% for subsequent loans. The fee decreases if you put more money down, but let's assume that it's your first VA loan and you're not making a down payment in this scenario. In that case, your funding fee would equal $6,325.

With a 4% closing cost, you'll need to pay another $11,000 upfront. That comes out to a total of $17,325. 

Upfront costs 

• Down payment  - $0
• Upfront VA funding fee - $6,325
• Closing costs - $11,000
• Total closing costs - $17,325

You can learn more about VA loans here.

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Other home expenses to consider

Along with your principal, interest, taxes and insurance (aka PITI), there are several other costs of homeownership to consider in your budget.

• HOA fees: Depending on your new home's location, you may be subject to homeowners or condo association fees each month, quarter or year.
• Maintenance and repairs: When you own a home, maintenance and repair expenses are inevitable. You'll have to factor those into your budget as well. Most experts recommend saving between 1% and 2% of your home's value for annual maintenance.
  
• Utility bills: There's a good chance you're already paying utility bills for your current home. But remember that moving to a new home, especially if you're moving from an apartment to a house, can result in significantly larger expenses for electricity, heat, natural gas and water.
  

More mortgage advice

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Source

https://customiseq.pops.my.id/

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How to save, invest and earn more for a better 2022

How to save, invest and earn more for a better 2022

This story is part of The Year Ahead, CNET's look at how the world will continue to evolve starting in 2022 and beyond.

Trying to forecast the future can be a fool's errand, but recent trends in the money world and expert financial predictions offer a window into what 2022 may have in store for us. From rising interest rates to inflation pressures to new IRS rules, here's an overview of what we can expect - and how to make the most of our money.

1.) In debt? Make pay down a priority

If you're saddled with high-interest debt, the new year may be a smart time to prioritize knocking down those balances, as the threat of rising interest rates looms.  

"The U.S. Federal Reserve lowered interest rates in response to the pandemic to help stimulate the economy, which made borrowing money far less expensive for consumers. But as the economy continues to improve and the inflation we're seeing now becomes more of a concern, it's likely the Fed will raise interest rates, which will make borrowing more expensive... which can affect everything from mortgages to credit card debt," says Stefanie O'Connell Rodriguez, host of Real Simple's Money Confidential podcast. 

"If you have credit card debt, this might be a good time to prioritize getting that balance down as much as possible so you're not just paying the minimums and subject to higher interest rates on your remaining balance as rates rise," she advises.

To ease the rate burden, you may want to consider transferring card balances to cards offering 0% introductory interest rates but only if you can pay down the balance before the promotional rate expires, which is often between 12 and 18 months.

Finally, the threat of rising rates may give some homeowners incentive to refinance. If your current mortgage has a variable interest rate -- which means it could periodically adjust with the market -- 2022 may be a wise time to consider switching to a fixed rate mortgage.  

2.) Focused on saving? Shop around  

In recent years we saw the personal saving rate in this country reach record highs - and for good reason. The uncertainties and life shifts brought upon us from the pandemic led those of us fortunate to still have income streams to save more. The stimulus checks also helped in some cases.

Now, if inflation continues to rear its head as it has in recent months, we may need our savings to pay for the increases in groceries, gas, homes and cars. Mapping out a budget for the new year to factor in some of these price hikes can prove essential, as could parking a little more money in the bank if you've yet to build up savings.  

"If you do not have an emergency fund, aim to save at least three to six months of necessary living expenses in a high-yield savings account," recommends Cindy Zuniga-Sanchez, founder of Zero-Based Budget Coaching LLC in New York. "The emergency fund serves as your financial cushion in the event of a job loss, decrease in income or other life change." 

Start with as little as you can but commit to saving consistently. An app like Digit is popular for helping users save small amounts incrementally. It uses machine learning to figure out the easiest amount you can save here and there and makes the transfers for you. Digit's website says the average user saves $2,200 a year through its app. Membership is $5 per month after a free 30-day trial.

And it's a good time to save, theoretically. While rising rates can spell bad news for those carrying debt, it's typically encouraging for those looking to earn more than the near zero percent rate or return they've been accustomed to in their bank accounts. And as more digital-only financial institutions with higher savings rates enter the marketplace vying for our deposits, more consumers may be incentivized to switch banks.

3.) Behind on retirement savings? Bank on new contribution limits  

If 2022 is the year you want to bump up your retirement savings, good news: In November the IRS announced that savers can set aside an extra $1,000 in their workplace retirement account. This includes the 401(k), 403(b), most 457 plans and Thrift Savings Plans. The new contribution limit - which is tax deductible - will be $20,500.

As a reminder to those who may have taken advantage of the CARES Act and taken a coronavirus-related withdrawal from their retirement plan in 2020 at no penalty, you can repay the full amount in 2022 and claim a refund on the taxes you paid. If you haven't done so already, remember that this may be the last eligible year to repay your retirement account to earn back the taxes you may have paid. 

4.) Eyeing a new house? Avoid knee-jerk reactions to rising rates

Prospective homeowners concerned about rising interest rates may be inclined to either sit back on the sidelines or speed up a purchase. But, as always when considering what's probably going to be the biggest financial purchase of your life, consider all of your expenses - and have some perspective. 

"Rates will tick up," says Kathy Braddock, Managing Director of William Raveis NYC. "But most younger buyers need to know that in the late 1970s and early 1980s, rates were close to 20 percent and people still bought homes."  

Braddock's advice to homebuyers is to first do the math to see which move - renting or buying - offers more financial and lifestyle benefits. If you do decide to buy in 2022, it's all the more important to have a strong credit score to bank on the best possible rate. Shop around for a quality loan, and to help ride out market fluctuations, lock your rate and have at least a three-year commitment to staying in the home before needing to sell, says Braddock. Our CNET mortgage calculator can also help you better determine how much house you can afford.

If it's any comfort, the National Realtors Association predicts more housing supply in the next year based on expectations of new construction and the expiration of the mortgage forbearance program prompting some owners to sell. This could help to reduce the rising pace of home prices in the previous year and lessen the sting of rising rates.

5.) Want to make more money? Engage your employer

With 2021's Great Resignation leaving some companies scrambling for new talent, the new year may be a fertile time for you to finally get that promotion or raise. That is, assuming you've been adding value and plan to stay with your company. 

While higher pay may be top of mind, don't forget that there are other financial benefits your employer may be able to address. Financial wellness programs that provide credit counseling and help workers budget and save are increasingly becoming a valuable employer benefit that prospective workers are seeking out. In fact, close to 70 percent of workers say it's their employer's responsibility to help them become financially healthy and secure, according to a 2021 survey by the Employee Benefit Research Institute.  

If you have student loan debt or are considering going back to school, remember that a lesser-known provision in the CARES Act temporarily allows employers to provide up to $5,250 in tax-exempt student loan repayment contributions or tuition assistance each year, through the end of 2025. "With four full years remaining, it's the perfect time for employees to be proactive by asking if their employers are aware of their ability to offer this financial wellness benefit and whether they are willing to do so," says Patricia Roberts, financial aid expert and author of Route 529.   

In summary, 2022 poses some unique financial challenges and opportunities led by the likelihood of inflation and rising interest rates. They're worth considering, as we aim to manage our money well and achieve our short and long-term goals. If you've yet to knock down high-interest credit card debt, start there, then focus on bulking up your emergency fund. Rising mortgage rates may fuel more anxiety in the housing market, but prospective homeowners should have a long-term view and consider all their expenses. Finally, if you're hoping to make more money or get some financial assistance, don't forget: talking to your employer may be a great place to start. 

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Source

https://smartfrenu.costa.my.id/

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Compare 15-Year Mortgage Rates for August 2022

Compare 15-Year Mortgage Rates for August 2022

Buying a home is a major financial decision, and interest rate levels have a major impact on how much your mortgage will cost you over the years. When you become a homeowner, you'll want to secure the right type of mortgage at the lowest possible rate. If you can manage a higher monthly payment, a 15-year mortgage is an attractive option if you're looking to pay off your home loan sooner while saving on interest.

Current 15-year mortgage rate trends

Rates for the 15-year mortgage are currently in the mid-to-upper 4% range, having dropped slightly since the Federal Reserve's most recent interest rate hike to combat inflation. Although rates had been steadily increasing since the beginning of 2022, they dropped because the Fed's increase was in line with market expectations. Interest rates typically go up when inflation soars, and the pressure on rates and prices has been most apparent in the real estate industry.

Even though mortgage rates dipped slightly, home prices will remain high in 2022. The more expensive homes get, the bigger the mortgage you'll need to afford that home. Make sure you shop around for mortgage lenders that can make worthwhile rates available to you. You should always meet with multiple lenders to figure out which loan offers make the most sense for your personal financial situation. 

Here's what you need to know to lock in the best mortgage rate possible for a new home.

The pros of a 15-year fixed mortgage

• Shorter loan term: The obvious benefit of a 15-year fixed mortgage is that it takes half the length of time to pay off compared to a 30-year mortgage. You will have higher monthly payments, but you'll pay this home loan off twice as fast, resulting in less interest over time. 
• Lower interest rates: Usually, 15-year fixed interest rates are lower than 30-year rates because the lender does not have to predict rates for an additional 15 years into the future, like they do for a 30-year loan. 
• Build equity in your home much faster: A 15-year fixed mortgage allows you to build more equity in your home faster. This means you can enjoy some of the advantages of homeownership, such as refinancing your home loan when rates go down again, sooner. Typically, to get a good refi rate, lenders like to see at least 20% in home equity.

The cons of a 15-year fixed mortgage

• Higher monthly payments: One downside to a 15-year mortgage is that you're stuck with high monthly payments for the duration of the home loan. For example, say you make a 20% down payment on a $500,000 mortgage at a 4% interest rate with a 15-year fixed mortgage, your monthly payment will be about $3,350, compared to just $2,300 with a 30-year fixed mortgage.
• The maximum mortgage amount you can borrow is smaller: Since you're making high payments every month, lenders will offer you a smaller mortgage amount than they might with a 30-year loan. This reduces the risk to the lender that you will default on the loan.
• Less financial flexibility overall: If you put all of your eggs into a 15-year mortgage, it could limit your opportunity to spend your money in other ways. For example, you may have less available to contribute to investment or retirement accounts. You may also have less of a financial cushion to fall back on if you run into difficulties.

Something to consider 

If you like the idea of paying off your mortgage sooner, but are worried about committing to higher monthly payments, there's an alternative to consider. If you choose a 30-year mortgage over a 15-year mortgage, you can make additional payments throughout the year, which will help shorten your loan term. This allows you to effectively pay off your 30-year mortgage sooner, without locking yourself into the higher monthly payments that are attached to a 15-year mortgage.

Current mortgage and refinance rates

We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country. 

FAQs

What is a 15-year fixed mortgage?

A 15-year fixed mortgage is a loan to buy a house that you will pay off over 15 years with a set interest rate. Since it has a shorter loan term than a 30-year mortgage, the monthly payments are much higher than with a fixed 30-year loan.

Who can qualify for a 15-year mortgage?

You must be able to afford higher monthly payments to qualify for a 15-year loan and confirm your ability to pay. That means your salary, credit score and debt-to-income ratio -- that is, how much debt you carry each month divided by your monthly income before taxes -- play a bigger role in a 15-year mortgage than they do for a 30-year mortgage. So if you have high-interest debt you're trying to pay down, a lender will factor in those payments when considering approving you for the loan.

What is the difference between a 15-year mortgage and a 30-year mortgage?

The main difference between a 15-year mortgage and a 30-year mortgage is that a 15-year mortgage will ultimately cost you less by saving you up to tens of thousands of dollars over the lifetime of the loan. You also pay a lower interest rate for a shorter amount of time, thereby lessening the overall cost of your loan. But paying off the loan in half the time means that your monthly payments can be almost double what they are for a 30-year loan.

More mortgage tools and resources

You can use CNET's mortgage calculator to help determine how much you can afford for a house and work out how to manage financially. The tool takes into account your monthly income, expenses and debt payments. In addition to those factors, your mortgage rate will depend on your credit score and the zip code where you are looking to buy a house.

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Buying a Home or Refinancing? Here's How to Find the Right Home Loan

Buying a Home or Refinancing? Here's How to Find the Right Home Loan

Navigating the world of home-buying could be an Olympic sport. There are so many different regulations, guidelines and fees to keep track of -- and by the time you master one part, there are new rules to learn. And, with mortgage rates predicted to continue rising, particularly as the Fed looks to increase rates as early as March, locking in a rate sooner rather than later may save you tens of thousands in interest.

When searching for the right home loan, you're bound to come across many options. But not every mortgage is right for every person -- you'll want to learn more about the different types of home loans to decide which one is right for you. This guide will help break down several of the most common home loan types, while explaining what's required for approval and who each type is best for.

Read more: Mortgages, Credit Scores and Down Payments: 5 Things to Know Before Buying a Home

1. Conventional loan

What it is: A conventional loan is a loan that isn't backed by a government agency. These are the most common type of loan. Conventional loan terms come in 10-, 15-, 20- and 30-year terms, with 30-year terms being the most popular option.

What you need: You can get a conventional loan with as little as 3% down payment and a 620 credit score. But the lower your credit score, the more money you might need for a down payment.

Who it's good for: The majority of home loans -- around 75% -- are conventional loans, so it's good for most people. You can use it for your first home, second home and even investment properties.

Who should skip it: Borrowers who don't have the minimum credit score requirements or need payment assistance.

2. FHA loan

What it is: An FHA loan is backed by the Federal Housing Administration, which provides mortgage insurance to lenders who provide FHA loans. It's the largest mortgage insurer in the world. Loans are administered by FHA-approved lenders. This can be local banks, credit unions and online lenders. Loans come in 15- and 30-year terms.

What you need: To secure a 3.5% down payment rate, your credit score will need to be 580 or above. If it's below 580, you can still qualify, but you'll need at least a 10% down payment. For down payments of less than 20%, your loan will require private mortgage insurance. PMI protects the lender just in case you default on your loan. PMI will get removed from your mortgage payments once you have at least 20% equity in your home.

Who it's good for: Borrowers who don't have strong enough credit to qualify for a conventional loan. FHA loans also offer down payment loans and grants through federal, state and local programs whereas conventional loans don't.

Who should skip it: If you have good or excellent credit that would qualify you for a conventional loan.

Check out our full guide to FHA loans.

3. VA loan

What it is: VA loans are offered through the US Department of Veterans Affairs. Military veterans, those in active duty or in the reserves qualify for VA loans. 

What you need: There's no down payment or minimum credit score requirement to get a VA loan.

Who it's good for: Those who serve or have served in the military.

Who should skip it: Borrowers who aren't in the military, obviously. VA loans are only good on primary residences so if you need funding for a second home or investment property, you'll need to look at other options.

Check out our full guide to VA loans.

4. USDA loans

What it is: USDA loans are funded by the US Department of Agriculture. They're available in specific regions across the country. They're made for borrowers in mostly rural areas who might not otherwise qualify for a traditional loan. Loans are backed by USDA-approved lenders (similar to FHA-backed loans). You can check to see if you'd qualify by checking the eligibility site.

What you need: There's no down payment required for a USDA loan. Most lenders require at least a fair credit score.

Who it's good for: Families in rural areas as long as you meet income and location limits.

Who should skip it: Those who don't meet the location and income requirements. If you qualify for one and not the other, you also might want to look into alternative loan options.

Check out our full guide to USDA loans.

Other loan types to know about

As well as being based on a government (or nongovernment) program, mortgages can be categorized by interest rates and how much the home price is. Those are:

• Fixed-rate loans: These are the most common type of loan within a conventional mortgage. Fixed-rate loans means you'll pay the same interest rate every month for the life of the loan. The only time your interest rate will change is if you refinance your mortgage.

• Adjustable-rate mortgages: ARMs have a fixed interest rate for a set amount of time and then the interest rate fluctuates periodically. They usually start out lower than standard fixed-rate mortgages but can change over time based on a benchmark. A 5/1 ARM means the first five years have a fixed rate and then a variable interest rate that changes every year after that.

• Jumbo loans: This is a mortgage that finances a property that's too expensive for a traditional loan. The qualifications for jumbo loans tend to be more strict. For most lenders, you'll need a credit score of at least 700 and usually a 20% down payment. Jumbo loans start where conforming loans end, which is different depending on where you are. Jumbo loans can have fixed or adjustable rates. 

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Inflation, Interest Rates and Jobs: How Today's Economy Compares to Recessions of the Past

Inflation, Interest Rates and Jobs: How Today's Economy Compares to Recessions of the Past

This story is part of Recession Help Desk, CNET's coverage of how to make smart money moves in an uncertain economy.

What's happening

There's still debate about whether the US economy is officially headed into a recession, but the economic downturn is causing widespread stress.

Why it matters

Periods of financial volatility and market decline can drive people to panic and make costly mistakes with their money.

What's next

Examining what's happening now -- and comparing it with the past -- can help investors and consumers decide what to do next.

Facing the aftershocks of a rough economy in the first half of 2022, with sky-high inflation, rising mortgage rates, soaring gas prices and a bear market for stocks, leading indicators of a recession have moderated slightly in the past month. That could mean the economic downturn won't be as long or brutal as expected. 

Still, the majority of Americans are feeling the sting of rising prices and anxiety over jobs. The country has experienced two consecutive quarters of economic slowdown -- the barometer for measuring a recession -- even though the National Bureau of Economic Research hasn't made the "official" recession call.  

At a time like this, we should consider what happens in a recession, look at the data to determine whether we're in one and try to maintain some historical perspective. It's also worth pointing out that down periods are temporary and that, over time, both the stock market and the US economy bounce back. 

I don't mean to minimize the gravity and hardship of the times. But it can be useful to review how the economy has behaved in the past to avoid irrational or impulsive money moves. For this, we can largely blame recency bias, our inclination to view our latest experiences as the most valid. It's what led many to flee the stock market in 2008 when the S&P 500 crashed, thereby locking in losses and missing out on the subsequent bull market. 

"It's our human tendency to project the immediate past into the future indefinitely," said Daniel Crosby, chief behavioral officer at Orion Advisor Solutions and author of The Laws of Wealth. "It's a time-saving shortcut that works most of the time in most contexts but can be woefully misapplied in markets that tend to be cyclical," Crosby told me via email. 

Before you make a knee-jerk reaction to your portfolio, give up on a home purchase or lose it over job insecurity, consider these chart-based analyses from the last three decades. We hope this data-driven overview will offer a broader context and some impetus for making the most of your money today.

What do we know about inflation? 

Historical inflation rate by year

Macrotrends.net

Current conditions: The US is experiencing the highest rate of inflation in decades, driven by global supply chain disruptions, the injection of federal stimulus dollars and a surge in consumer spending. In real dollars, the 8.5% rise in consumer prices over the past year is adding about $400 more per month to household budgets. 

The context: Policymakers consider 2% per year to be a "normal" inflation target. The country's still experiencing over four times that figure. The 9.1% annual rate in July was the largest jump in inflation since 1980 when the inflation rate hit 13.5% following the prior decade's oil crisis and high government spending on defense, social services, health care, education and pensions. Back then, the Federal Reserve increased rates to stabilize prices and, by the mid-1980s, inflation fell to below 5%.

The upside: As overall inflation rates rise, the silver lining might be increased rates of return on personal savings. Bank accounts are starting to offer more attractive yields, while I bonds -- federally backed accounts that more or less track inflation -- are attracting savers, too. 

What's happening with mortgage rates? 

30-year fixed-rate mortgage averages in the US

Current conditions: As the Federal Reserve continues its rate-hike campaign to cool spending and try to tame inflation, the rate on a 30-year fixed mortgage has grown significantly. In June, the average rate jumped annually by nearly 3 percentage points to almost 6%. In real dollars, that means that after a 20% down payment on a new home (let's use the average sale price of $429,000), a buyer would roughly need an extra $7,300 a year to afford the mortgage. Since then, rates have cooled a bit, even dipping back down below 5%. What happens next with rates depends on where inflation goes from here.

The context: Three years ago, homebuyers faced similar borrowing costs and, at the time, rates were characterized as "historically low." And if we think borrowing money is expensive today, let's not forget the early 1980s when the Federal Reserve jacked up rates to never-before-seen levels due to hyperinflation. The average rate on a 30-year fixed-rate mortgage in 1981 topped 16%. 

The upside: For homebuyers, a potential benefit to rising rates is downward pressure on home prices, which could cause the housing market to cool slightly. As the cost to borrow continues to increase with mortgages becoming more expensive, homes could experience fewer offers and prices would slow in pace. In fact, nearly one in five sellers dropped their asking price during late April through late May, according to Redfin. 

On the flip side, less homebuyers mean more renters. Rent prices have skyrocketed, and housing activists are asking the White House to take action on what they call a "national emergency."

What about the stock market? 

Dow Jones Industrial Average stock market index for the past 30 years

Macrotrends.net

Current conditions: Year-to-date, the Dow Jones Industrial Average -- a composite of 30 of the most well-known US stocks such as Apple, Microsoft and Coca-Cola -- is about 8.5% below where it started in January. Relative to the broader market, technology stocks are down much more. The Nasdaq is off almost 19% since the start of the year. 

The benchmark S&P 500 stock index hit lows in June that marked a more than 20% drop from January, which brought us officially into a bear market. Since then, it's bounced back up a little, but some experts warn that a current bear market rally is at odds with expected earnings and we could see even lower stock prices in the near future.

The context: Stock price losses in 2022 are not nearly as swift and steep as what we saw in March 2020, when panic over the pandemic drove the DJIA down by 26% in roughly four trading days. The market reversed course the following month and began a bull run lasting more than two years, as the lockdown drove massive consumption of products and services tied to software, health care, food and natural gas. 

Prior to that, in 2008 and 2009, a deep and pervasive crisis in housing and financial services sank the Dow by nearly 55% from its 2007 high. But by fall 2009, it was off to one of its longest winning streaks in financial history. 

The upside: Given the cyclical nature of the stock market, now is not the time to jump ship.* "Times that are down, you at least want to hold and/or think about buying," said Adam Seessel, author of Where the Money Is. "Over the last 100 years, American stocks have been the surest way to grow wealthy slowly over time," he told me during a recent So Money podcast.

*One caveat: If you're closer to or living in retirement and your portfolio has taken a sizable hit, it may be worth talking to a professional and reviewing your selection of funds to ensure that you're not taking on too much risk. Target-date funds, a popular investment vehicle in many retirement accounts that auto-adjust for risk as you age, may be too risky for pre- or early retirees. 

What does unemployment tell us? 

US unemployment rates

Current conditions: The July jobs report shows the unemployment rate holding steady, slightly dropping to 3.5%. The Great Resignation of 2021, where millions of workers quit their jobs over burnout, as well as unsatisfactory wages and benefits, left employers scrambling to fill positions. However, that could be changing as economic challenges deepen: More job losses are likely on the horizon, and an increasing number of workers are concerned with job security. 

The context: The rebound in theunemployment rate is an economic hallmark of the past two years. But the ongoing interest rate hike may weigh on corporate profits, leading to more layoffs and hiring freezes. For context, during the Great Recession, in a two-year span from late 2007 to 2009, the unemployment rate rose sharply from about 5% to 10%. 

Today, the tech sector is one to watch. After benefiting from rapid growth led by consumer demand in the pandemic, companies like Google and Facebook may be in for a "correction." Layoffs.fyi, a website that tracks downsizing at tech startups, logged close to 37,000 layoffs in Q2, more than triple from the same period last year. 

The upside: If you're worried about losing your job because your employer may be more vulnerable in a recession, document your wins so that when review season arrives, you're ready to walk your manager through your top-performing moments. Offer strategies for how to weather a potential slowdown. All the while, review your reserves to see how far you can stretch savings in case you're out of work. Keep in mind that in the previous recession, it took an average of eight to nine months for unemployed Americans to secure new jobs.

§

What's happening

Home prices overall are up by 37% since March 2020.

Why it matters

Surging home prices and higher interest rates make monthly mortgage payments less affordable.

What's next

Rising mortgage rates will make borrowing money more expensive, which will lessen competition to buy homes and eventually flatten prices.

Home prices continued to skyrocket in March as buyers tried to stay ahead of rising mortgage rates. 

Prices increased by 20.6% this March compared to last year, according to the S&P CoreLogic Case-Shiller Indices, the leading measures of US home prices. This was the highest year-over-year increase in March for home prices in more than 35 years of data. Seven in 10 homes sold for more than their asking price, according to CoreLogic. 

Out of the 20 cities tracked by the 20-city composite index, Tampa, Phoenix and Miami saw the highest year-over-year gains in March. Tampa saw the greatest increase, with an almost 35% increase in home prices year-over-year. All 20 cities experienced double-digit price growth for the year ending in March.

The strongest price growth was seen in the south and southeast, with both regions posting almost 30% gains in March. Seventeen of the 20 metro areas also saw acceleration in their annual gains since February. 

"Those of us who have been anticipating a deceleration in the growth rate of US home prices will have to wait at least a month longer," said Craig Lazzara, managing director at S&P DJI, in the release. "The strength of the Composite indices suggests very broad strength in the housing market, which we continue to observe."

Since the start of the pandemic in March 2020, home prices overall are up by 37%. The current surge in home prices is a result of tight competition between buyers in a low-inventory market as they attempt to lock in lower mortgage rates before rates jump even higher throughout the year, as experts predict they will.

If you're considering buying a new home -- or are actively in the market -- the news isn't all bad. Interest rates are at their highest point in more than 40 years, and one potential benefit of that may, eventually, be downward pressure on home prices. As it becomes increasingly expensive to borrow money, fewer people will seek to do so, and homes for sale may receive fewer offers leading to, eventually, lower prices. In fact, nearly one in five sellers lowered their asking price during a four-week period in May and April, according to Redfin.

"Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer," said Lazzara. "Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call."

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Mortgage Interest Rates for Sept. 1, 2022: Rates Climb

Mortgage Interest Rates for Sept. 1, 2022: Rates Climb

Some important mortgage rates increased today. The average 15-year fixed and 30-year fixed mortgage rates both grew. For variable rates, the 5/1 adjustable-rate mortgage also floated higher.

Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat. Interest rates are dynamic and unpredictable -- at least on a daily or weekly basis -- and they respond to a wide variety of economic factors. Right now, they're particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you're looking to buy a home, trying to time the market may not play to your favor. If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it's always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 5.95%, which is an increase of 3 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one -- but usually a higher interest rate. You won't be able to pay off your house as quickly and you'll pay more interest over time, but a 30-year fixed mortgage is a good option if you're looking to minimize your monthly payment.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 5.19%, which is an increase of 11 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will usually be the better deal, if you're able to afford the monthly payments. These include typically being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 4.42%, a climb of 9 basis points compared to a week ago. For the first five years, you'll usually get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. But you could end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. If not, shifts in the market could significantly increase your interest rate.

Mortgage rate trends

Though mortgage rates were historically low at the beginning of 2022, they have been rising somewhat steadily since then. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Though the Fed does not directly set mortgage rates, the central bank's policy actions influence how much you pay to finance your home loan. If you're looking to buy a house in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders across the country:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	5.95%	5.92%	+0.03
15-year fixed rate	5.19%	5.08%	+0.11
30-year jumbo mortgage rate	5.94%	5.93%	+0.01
30-year mortgage refinance rate	5.92%	5.85%	+0.07

Updated on Sept. 1, 2022.

How to find personalized mortgage rates

When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. When researching home mortgage rates, take into account your goals and current financial situation. A range of factors -- including your down payment, credit score, loan-to-value ratio and debt-to-income ratio -- will all affect your mortgage interest rate. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. Apart from the mortgage rate, additional costs including closing costs, fees, discount points and taxes might also impact the cost of your home. Be sure to comparison shop with multiple lenders -- including credit unions and online lenders in addition to local and national banks -- in order to get a mortgage that's the right fit for you.

What's the best loan term?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are set for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (commonly five, seven or 10 years). After that, the rate adjusts annually based on the current interest rate in the market.

One thing to think about when deciding between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your house. Fixed-rate mortgages might be a better fit if you plan on staying in a home for quite some time. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you aren't planning to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. The best loan term is entirely dependent on your personal situation and goals, so be sure to think about what's important to you when choosing a mortgage.

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Home equity line of credit heloc rates for september 2022 holiday home equity line of credit heloc rates for september 2022 movie home equity line of credit how does a home equity line of credit work home equity line of credit home equity loan home equity loan rates wells fargo home equity loan home equity loan requirements

Home Equity Line of Credit: HELOC Rates for September 2022

Home Equity Line of Credit: HELOC Rates for September 2022

A home equity line of credit, or HELOC, is a loan that allows you to borrow against the equity you've built up in your home and functions like a credit card. It provides an open line of credit that you can access for a certain amount of time (usually 10 years). During that time, you're only required to pay back the interest on money you've withdrawn, which means you can borrow a large amount of money for an extended period of time while only making minimum monthly payments.

HELOCs can be a good option because they have lower rates than most credit cards, personal loans, home equity loans and mortgage refinances. But HELOCs are also risky because they're secured loans, which require collateral to obtain financing: Your home serves as the collateral, so if you're unable to pay back the money you've withdrawn, you could lose your house. In addition, HELOCs have variable interest rates that mean your rate can go up or down with the market, so you won't always have a predictable monthly payment.

We'll walk you through how a HELOC works, how to decide if it's the right option for you and how it stacks up against other loan types.

Current HELOC rate trends

Right now, the average interest rate for a HELOC is 6.5%, according to Bankrate, which is owned by the same parent company as CNET. Anything below the average rate is typically considered a good rate for HELOCs. 

Interest rates for HELOCs are variable and largely determined by the benchmark interest rate, which is set by the Federal Reserve. So far this year, the Fed has raised the benchmark interest rate four times and has signaled it will continue raising rates throughout 2022. Interest rates for HELOCs tend to be lower than mortgage rates and other home equity loan rates, which is one of the benefits. They also usually have introductory periods during which they offer an even lower rate for a certain amount of time. 

What is a HELOC?

A HELOC is a home loan that allows you to tap into your home's equity over an extended period of time. You can find out how much equity you have in your home by subtracting your remaining mortgage balance from the house's current market value. So if your house is worth $500,000 and you have $300,000 left to pay off on your mortgage, you would have $200,000 in equity. Typically you can borrow up to 85% of your equity — in this case, that's $170,000.

A HELOC functions as a revolving line of credit that you can continually access. The time period when you can draw money from your line of credit is called the draw period, and it's usually 10 years for HELOCs. This could be a good option if you need access to money, but aren't sure how much you'll need (or when you'll need it). HELOCs also tend to have lower interest rates than other types of home loans or personal loans.

If you need cash for home improvements or to pay higher education costs like tuition, a HELOC can be beneficial because you can repeatedly withdraw money over the course of your loan term. Plus, you only have to pay interest on the money that you withdraw. So, if you're approved for a HELOC of $100,000 and only withdraw $25,000, you'll only pay interest on the $25,000. 

How do HELOCs work?

Since HELOCs work like a line of credit, during the draw period you can take out money as many times as you need via check or a debit card, as long as it's below your total HELOC loan amount. You must also make minimal monthly payments, typically just for the interest that accrues during the draw period. As you repay your HELOC, this money is added back to your revolving balance (so you can continue to withdraw funds).

Once the draw period comes to an end you enter the repayment period, which usually lasts between 10 to 20 years. At this point, you cannot take more money out of your HELOC. Once you're in the repayment period, your monthly payments will go up because you must start paying back the principal (the amount you withdrew) in addition to the accrued interest.

Pros of a HELOC

• Lower interest rates: HELOCs typically have lower interest rates than other home equity loans, personal loans or credit cards. 
• Long draw and repayment periods: Most HELOCs let you withdraw money for as long as 10 years, and then offer an even longer repayment period (usually up to 20 years).
  
• You can take the money in installments: You don't have to use all of the money available at once, and you only have to pay interest on the funds you withdraw.
  

Cons of a HELOC

• You have to use your own home as collateral: If you default on a HELOC or can't make your payments, you could lose your home. When you put a house up as collateral and cannot repay your loan, the bank or lender can foreclose on your home, which means they can take ownership of your house in order to make up for the money they lost. 
• They have variable interest rates: Your initial interest rate may be low, but HELOC rates are variable and not fixed. This means they can fluctuate depending on what's happening with the economy and the benchmark interest rate. This means your monthly payments are not predictable and can fluctuate over the course of the loan. While there are fixed-rate HELOCs, they are less common and are considered a hybrid between a HELOC and a home equity loan.
  
• There may be minimum withdrawal amounts: Some HELOCs have minimal initial withdrawal amounts, which could lead you to taking out more money than planned (and having to pay back more than planned).
  

HELOCs vs. home equity loans

HELOCs and home equity loans both allow you to borrow against the equity you've built up in a home. With both, you take out a second home loan in addition to your mortgage. Your home is also used as collateral to secure either type of loan. A home equity loan, however, offers a lump sum of cash that you pay back in fixed monthly installments. A HELOC, on the other hand, approves you for a set loan amount and then allows you to withdraw only what you need, when you need it.

A HELOC has a variable interest rate, whereas home equity loans are fixed-rate loans. This means, you'll have a more predictable monthly payment with a home equity loan. HELOCs are much more flexible, but your monthly payments can be more unpredictable since your interest rate can fluctuate. With a HELOC, you need to make sure you can afford your monthly interest payments if your rate shoots up.

A HELOC is better if

• You need access to credit for an extended period of time (usually 10 years)
• You need more time to repay the loan amount
  
• You want the flexibility to withdraw your money in installments and not all at once
  

A home equity loan is better if

• You want a fixed interest rate
• You want a predictable monthly repayment schedule
  
• You want one lump sum of cash and know exactly how much money you need

HELOCs vs. cash-out refinances

A cash-out refinance is a different type of loan than a HELOC: You are quite literally cashing out the equity you've built up in your home over the years. It replaces your current mortgage with a new mortgage equal to your home's value, and allows you to cash out the amount you've built in equity. If your home is valued at $300,000 and you still owe $100,000 on a mortgage, the difference of $200,000 is your home equity. Lenders often let you cash out 80% of your equity ($140,000 in this case).

With a HELOC, you're also cashing out your equity, but you are taking out an additional loan alongside your current mortgage. So, you will have to make your monthly mortgage payments in addition to repaying your HELOC each month. With a cash-out refinance, you are only responsible for your mortgage payment every month. However, your mortgage payment will be more expensive because you added more money onto your mortgage when you cashed out your equity.

A cash-out refinance offers you this equity in a lump sum, whereas a HELOC lets you draw on your equity in installments and offers a yearslong line of credit.

A HELOC is better if

• You need access to credit for an extended period of time (usually 10 years)
• You need a longer loan repayment period
  
• You want to the flexibility to withdraw your money in installments
  

A cash-out refinance is better if

• You want to refinance your mortgage to a lower interest rate or shorter term
• You want one one lump sum of cash and know the amount
  
• You want one fixed monthly mortgage payment
  

FAQs

What is a good HELOC rate?

Anything below the average rate is typically considered a good rate for HELOCs. Currently, the average interest rate for a HELOC is 6.5%, according to Bankrate. 

How do I qualify for a HELOC?

To qualify for a HELOC, you must have good credit, at least 15% to 20% equity in your home and a debt-to-income ratio that does not exceed 43%. (Your debt-to-income ratio is your total monthly debts divided by your gross monthly income.) So, if you make $4,000 a month before taxes and pay $1,500 in debts each month, your DTI would equal 37.5%. The lower your DTI, the better your approval chances.

If you have good or excellent credit, you could lock in a lower HELOC rate closer to 3% to 5%. If you have below average credit expect to pay rates closer to 9% to 10%. Lenders usually want to see at least a 620 credit score or higher. You can be denied for a HELOC if you don't have a high enough credit score or income. You can also be denied if you don't have enough equity built up in your home. Most lenders require at least 15% to 20%. 

What can I use a HELOC for?

You can use your line of credit for almost anything, but HELOCs are typically best for people who need access to available credit over a long period of time or who will be making recurring withdrawals. For example, HELOCs are good for home improvement projects that could potentially take years or higher education expenses like tuition.

How do I apply for a HELOC?

You have to be approved for a HELOC by a bank or lender just like with your mortgage. You will need to provide financial documents like pay stubs and information about your home's value, like your loan-to-value ratio. Lenders will also run a credit check before approving you. 

In some cases, you may need to have your home appraised to confirm its current market value. It's important to interview multiple lenders to compare rates and fees in order to find one who will give you the best rates. Some experts recommend starting with the bank or lender that already holds your mortgage, but shopping around can help you compare offers. 

More mortgage tools and resources

You can use CNET's mortgage calculator to help you determine how much house you can afford. The CNET mortgage calculator factors in variables like the size of your down payment, home price and interest rate to help you figure out how large of mortgage you may be able to afford. Using the CNET mortgage calculator can help you understand how much of a difference even a slight increase in rates can make in how much interest you'll pay over the lifetime of your loan.

Compare mortgage rates:

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Mortgage Interest Rates Today for Aug. 17, 2022: 30-Year Fixed Rate Eases

Mortgage Interest Rates Today for Aug. 17, 2022: 30-Year Fixed Rate Eases

Today rates followed a split path. While 15-year fixed mortgage rates saw an increase along with 5/1 adjustable-rate mortgages, interest rates on 30-year fixed-rate mortgages sank a bit. 

Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat. Interest rates are dynamic and unpredictable -- at least on a daily or weekly basis -- and they respond to a wide variety of economic factors. Right now, they're particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you're looking to buy a home, trying to time the market may not play to your favor. If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it's always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 5.54%, which is a decrease of 3 basis points from one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one -- but often a higher interest rate. Although you'll pay more interest over time -- you're paying off your loan over a longer timeframe -- if you're looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 4.89%, which is an increase of 2 basis points from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. You'll most likely get a lower interest rate, and you'll pay less interest in total because you're paying off your mortgage much quicker.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 4.21%, an increase of 2 basis points from the same time last week. You'll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. But since the rate changes with the market rate, you might end up paying more after that time, as described in the terms of your loan. Because of this, an ARM could be a good option if you plan to sell or refinance your house before the rate changes. If not, shifts in the market may significantly increase your interest rate.

Mortgage rate trends

Though mortgage rates were historically low at the beginning of 2022, they have been increasing somewhat steadily since then. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Though the Fed does not directly set mortgage rates, the central bank's policy actions influence how much you pay to finance your home loan. If you're looking to buy a house in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders across the country:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	5.54%	5.57%	-0.03
15-year fixed rate	4.89%	4.87%	+0.02
30-year jumbo mortgage rate	5.53%	5.56%	-0.03
30-year mortgage refinance rate	5.50%	5.53%	-0.03

Updated on Aug. 17, 2022.

How to find personalized mortgage rates

You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. When researching home mortgage rates, consider your goals and current financial situation. Specific mortgage rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a good credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. The interest rate isn't the only factor that affects the cost of your home — be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Make sure you talk to multiple lenders -- like local and national banks, credit unions and online lenders -- and comparison shop to find the best loan for you.

What is a good loan term?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are fixed for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only stable for a certain amount of time (commonly five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate.

One important factor to take into consideration when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on living in your home. If you plan on staying long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you don't have plans to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. There is no best loan term as a rule of thumb; it all depends on your goals and your current financial situation. It's important to do your research and know your own priorities when choosing a mortgage.

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