Today's mortgage rates fall for 30-year terms | January 23 (2024)

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as "Credible" below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The interest rate on a 30-year fixed-rate mortgage is 6.500% as of January 23, which is 0.125 percentage points lower than yesterday.

With mortgage rates changing daily, it’s a good idea to check today’s rate before applying for a loan. It’s also important to compare different lenders’ current interest rates, terms, and fees to ensure you get the best deal.

Rates last updated on January 23, 2024. Rates are based on the assumptions shown here. Actual rates may vary. Credible, a personal finance marketplace, has 5,000 Trustpilot reviews with an average star rating of 4.7 (out of a possible 5.0).

  • How do mortgage rates work?
  • What determines the mortgage rate?
  • How to compare mortgage rates
  • Pros and cons of mortgages
  • How to qualify for a mortgage
  • How to apply for a mortgage
  • How to refinance a mortgage
  • FAQ

How do mortgage rates work?

When you take out a mortgage loan to purchase a home, you’re borrowing money from a lender. In order for that lender to make a profit and reduce risk to itself, it will charge interest on the principal — that is, the amount you borrowed.

Expressed as a percentage, a mortgage interest rate is essentially the cost of borrowing money. It can vary based on several factors, such as your credit score, debt-to-income ratio (DTI), down payment, loan amount, and repayment term.

After getting a mortgage, you’ll typically receive an amortization schedule, which shows your payment schedule over the life of the loan. It also indicates how much of each payment goes toward the principal balance versus the interest.

Near the beginning of the loan term, you’ll spend more money on interest and less on the principal balance. As you approach the end of the repayment term, you’ll pay more toward the principal and less toward interest.

Your mortgage interest rate can be either fixed or adjustable. With a fixed-rate mortgage, the rate will be consistent for the duration of the loan. With an adjustable-rate mortgage (ARM), the interest rate can fluctuate with the market.

Keep in mind that a mortgage’s interest rate is not the same as its annual percentage rate (APR). This is because an APR includes both the interest rate and any other lender fees or charges.

Mortgage rates change frequently — sometimes on a daily basis. Inflation plays a significant role in these fluctuations. Interest rates tend to rise in periods of high inflation, whereas they tend to drop or remain roughly the same in times of low inflation. Other factors, like the economic climate, demand, and inventory can also impact the current average mortgage rates.

To find great mortgage rates, start by using Credible’s secured website, which can show you current mortgage rates from multiple lenders without affecting your credit score. You can also use Credible’s mortgage calculator to estimate your monthly mortgage payments.

What determines the mortgage rate?

Mortgage lenders typically determine the interest rate on a case-by-case basis. Generally, they reserve the lowest rates for low-risk borrowers — that is, those with a higher credit score, income, and down payment amount. Here are some other personal factors that may determine 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 compare mortgage rates

Along with certain economic and personal factors, the lender you choose can also affect your mortgage rate. Some lenders have higher average mortgage rates than others, regardless of your credit or financial situation. That’s why it’s important to compare lenders and loan offers.

Here are some of the best ways to compare mortgage rates and ensure you get the best one:

  • Shop around for lenders: Compare several lenders to find the best rates and lowest fees. Even if the rate is only lower by a few basis points, it could still save you thousands of dollars over the life of the loan.
  • Get several loan estimates: A loan estimate comes with a more personalized rate and fees based on factors like income, employment, and the property’s location. Review and compare loan estimates from several lenders.
  • Get pre-approved for a mortgage: Pre-approval doesn’t guarantee you’ll get a loan, but it can give you a better idea of what you qualify for and at what interest rate. You’ll need to complete an application and undergo a hard credit check.
  • Consider a mortgage rate lock: A mortgage rate lock lets you lock in the current mortgage rate for a certain amount of time — often between 30 and 90 days. During this time, you can continue shopping around for a home without worrying about the rate changing.
  • Choose between an adjustable- and fixed-rate mortgage: The interest rate type can affect how much you pay over time, so consider your options carefully.

One other way to compare mortgage rates is with a mortgage calculator. Use a calculator to determine your monthly payment amount and the total cost of the loan. Just remember, certain fees like homeowners insurance or taxes might not be included in the calculations.

Here’s a simple example of what a 15-year fixed-rate mortgage might look like versus a 30-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

Pros and cons of mortgages

If you’re thinking about taking out a mortgage, here are some benefits to consider:

  • Predictable monthly payments: Fixed-rate mortgage loans come with a set interest rate that doesn’t change over the life of the loan. This means more consistent monthly payments.
  • Potentially low interest rates: With good credit and a high down payment, you could get a competitive interest rate. Adjustable-rate mortgages may also come with a lower initial interest rate than fixed-rate loans.
  • Tax benefits: Having a mortgage could make you eligible for certain tax benefits, such as a mortgage interest deduction.
  • Potential asset: Real estate is often considered an asset. As you pay down your loan, you can also build home equity, which you can use for other things like debtconsolidation or home improvement projects.
  • Credit score boost: With on-time payments, you can build your credit score.

And here are some of the biggest downsides of getting a mortgage:

  • Expensive fees and interest: You could end up paying thousands of dollars in interest and other fees over the life of the loan. You will also be responsible for maintenance, property taxes, and homeowners insurance.
  • Long-term debt: Taking out a mortgage is a major financial commitment. Typical loan terms are 10, 15, 20, and 30 years.
  • Potential rate changes: If you get an adjustable rate, the interest rate could increase.

How to qualify for a mortgage

Requirements vary by lender, but here are the typical steps to qualify for a mortgage:

  1. Have steady employment and income: You’ll need to provide proof of income when applying for a home loan. This may include money from your regular job, alimony, military benefits, commissions, or Social Security payments. You may also need to provide proof of at least two years’ worth of employment at your current company.
  2. Review any assets: Lenders consider your assets when deciding whether to lend you money. Common assets include money in your bank account or investment accounts.
  3. Know your DTI: Your DTI is the percentage of your gross monthly income that goes toward your monthly debts — like installment loans, lines of credit, or rent. The lower your DTI, the better your approval odds.
  4. Check your credit score: To get the best mortgage rate possible, you’ll need to have good credit. However, each loan type has a different credit score requirement. For example, you’ll need a credit score of 580 or higher to qualify for an FHA loan with a 3.5% down payment.
  5. Know the property type: During the loan application process, you may need to specify whether the home you want to buy is your primary residence. Lenders often view a primary residence as less risky, so they may have more lenient requirements than if you were to get a secondary or investment property.
  6. Choose the loan type: Many types of mortgage loans exist, including conventional loans, VA loans, USDA loans, FHA loans, and jumbo loans. Consider your options and pick the best one for your needs.
  7. Prepare for upfront and closing costs: Depending on the loan type, you may need to make a down payment. The exact amount depends on the loan type and lender. A USDA loan, for example, has no minimum down payment requirement for eligible buyers. With a conventional loan, you’ll need to put down 20% to avoid private mortgage insurance (PMI). You may also be responsible for paying any closing costs when signing for the loan.

How to apply for a mortgage

Here are the basic steps to apply for a mortgage, and what you can typically expect during the process:

  1. Choose a lender: Compare several lenders to see the types of loans they offer, their average mortgage rates, repayment terms, and fees. Also, check if they offer any down payment assistance programs or closing cost credits.
  2. Get pre-approved: Complete the pre-approval process to boost your chances of getting your dream home. You’ll need identifying documents, as well as documents verifying your employment, income, assets, and debts.
  3. Submit a formal application: Complete your chosen lender’s application process — either in person or online — and upload any required documents.
  4. Wait for the lender to process your loan: It can take some time for the lender to review your application and make a decision. In some cases, they may request additional information about your finances, assets, or liabilities. Provide this information as soon as possible to prevent delays.
  5. Complete the closing process: If approved for a loan, you’ll receive a closing disclosure with information about the loan and any closing costs. Review it, pay the down payment and closing costs, and sign the final loan documents. Some lenders have an online closing process, while others require you to go in person. If you are not approved, you can talk to your lender to get more information and determine how you can remedy any issues.

How to refinance a mortgage

Refinancing your mortgage lets you trade your current loan for a new one. It does not mean taking out a second loan. You will also still be responsible for making payments on the refinanced loan.

You might want to refinance your mortgage if you:

  • Want a lower interest rate or different rate type
  • Are looking for a shorter repayment term so you can pay off the loan sooner
  • Need a smaller monthly payment
  • Want to remove the PMI from your loan
  • Need to use the equity for things like home improvement or debt consolidation (cash-out refinancing)

The refinancing process is similar to the process you follow for the original loan. Here are the basic steps:

  • 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 closing, review the loan documents, and pay any closing costs.

FAQ

What is a rate lock?

Interest rates on mortgages fluctuate all the time, but a rate lock allows you to lock in your current rate for a set amount of time. This ensures you get the rate you want as you complete the homebuying process.

What are mortgage points?

Mortgage points are a type of prepaid interest that you can pay upfront — often as part of your closing costs — for a lower overall interest rate. This can lower your APR and monthly payments.

What are closing costs?

Closing costs are the fees you, as the buyer, need to pay before getting a loan. Common fees include attorney fees, home appraisal fees, origination fees, and application fees.

If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible's free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.

Mortgage Rates and How They Work

Mortgage rates are the interest rates charged by lenders on mortgage loans. When you take out a mortgage loan to purchase a home, you're borrowing money from a lender, and the lender charges interest on the principal amount you borrowed. The mortgage interest rate is expressed as a percentage and represents the cost of borrowing money [[1]].

Several factors can influence mortgage rates, including:

  • Credit score: A higher credit score generally leads to lower mortgage rates.
  • Debt-to-income ratio (DTI): Lenders consider your DTI, which is the percentage of your gross monthly income that goes toward debt payments. A lower DTI can result in better mortgage rates.
  • Down payment: A larger down payment can lead to lower mortgage rates.
  • Loan amount: The size of the loan can affect the interest rate.
  • Repayment term: The length of the loan term can impact the interest rate.
  • Type of interest rate: Mortgage rates can be fixed or adjustable. Fixed-rate mortgages have a consistent interest rate throughout the loan term, while adjustable-rate mortgages (ARMs) have rates that can fluctuate with the market [[1]].

It's important to note that a mortgage's interest rate is different from its annual percentage rate (APR). The APR includes both the interest rate and any other lender fees or charges [[1]].

Mortgage rates can change frequently, sometimes on a daily basis. Factors such as inflation, economic conditions, demand, and inventory can all impact current average mortgage rates [[1]].

Comparing Mortgage Rates

When comparing mortgage rates, it's essential to shop around and consider multiple lenders. Here are some steps you can take to compare mortgage rates effectively:

  1. Shop around for lenders: Compare rates and fees from different lenders to find the best deal.
  2. Get several loan estimates: Loan estimates provide personalized rates and fees based on your financial situation. Review and compare estimates from multiple lenders.
  3. Get pre-approved for a mortgage: Pre-approval gives you an idea of what you qualify for and at what interest rate. It involves completing an application and undergoing a credit check.
  4. Consider a mortgage rate lock: A rate lock allows you to secure the current mortgage rate for a specific period, protecting you from rate fluctuations while you continue shopping for a home.
  5. Choose between fixed and adjustable rates: Consider the pros and cons of fixed-rate and adjustable-rate mortgages to determine which option suits your needs [[2]].

Using a mortgage calculator can also help you compare rates and estimate your monthly payments. However, keep in mind that certain fees like homeowners insurance or taxes might not be included in the calculations [[2]].

Pros and Cons of Mortgages

When considering a mortgage, it's important to weigh the pros and cons. Here are some benefits and drawbacks to keep in mind:

Pros:

  • Predictable monthly payments: Fixed-rate mortgages offer consistent monthly payments throughout the loan term.
  • Potentially low interest rates: With good credit and a high down payment, you may qualify for competitive interest rates.
  • Tax benefits: Owning a home can make you eligible for certain tax benefits, such as a mortgage interest deduction.
  • Potential asset: Real estate is often considered an asset, and as you pay down your loan, you can build home equity.
  • Credit score boost: Making on-time mortgage payments can help improve your credit score [[3]].

Cons:

  • Expensive fees and interest: Mortgage loans can involve significant interest payments and fees over the life of the loan.
  • Long-term debt: Mortgages typically have long repayment terms, which means committing to a significant financial obligation.
  • Potential rate changes: If you have an adjustable-rate mortgage, the interest rate can increase over time [[3]].

Qualifying for a Mortgage

To qualify for a mortgage, lenders typically consider several factors. Here are some typical steps to qualify for a mortgage:

  1. Steady employment and income: Lenders require proof of income, including regular job income, alimony, military benefits, commissions, or Social Security payments. They may also require proof of at least two years of employment at your current company.
  2. Review assets: Lenders consider your assets, such as money in bank or investment accounts.
  3. Check your DTI: Your debt-to-income ratio is an important factor. A lower DTI improves your approval odds.
  4. Check your credit score: Good credit is crucial for getting the best mortgage rates. Different loan types have different credit score requirements.
  5. Know the property type: Specify whether the home is your primary residence, secondary residence, or investment property.
  6. Choose the loan type: Consider different loan types, such as conventional loans, VA loans, USDA loans, FHA loans, and jumbo loans.
  7. Prepare for upfront and closing costs: Depending on the loan type, you may need to make a down payment and pay closing costs [[4]].

Applying for a Mortgage

Here are the basic steps to apply for a mortgage:

  1. Choose a lender: Compare lenders based on loan types, rates, repayment terms, and fees.
  2. Get pre-approved: Complete the pre-approval process to increase your chances of getting approved for a loan.
  3. Submit a formal application: Complete the lender's application process, either in person or online, and provide any required documents.
  4. Wait for the lender to process your loan: The lender will review your application and may request additional information.
  5. Complete the closing process: If approved, you'll receive a closing disclosure with loan details and closing costs. Review, pay the down payment and closing costs, and sign the final loan documents. Some lenders offer online closings, while others require in-person visits. If you're not approved, you can discuss the reasons with your lender and explore potential solutions [[5]].

Refinancing a Mortgage

Refinancing a mortgage involves replacing your current loan with a new one. Here are the basic steps to refinance a mortgage:

  1. Choose the type of refinancing: Determine the type of refinancing that suits your needs, such as rate and term refinancing or cash-out refinancing.
  2. Compare lenders: Compare lenders to find the best rates and terms for your refinanced loan.
  3. Complete the application process: Apply for refinancing and provide any required documentation.
  4. Wait for the lender to review your application: The lender will review your application and may request additional information.
  5. Provide supporting documentation: If requested, provide any additional documentation required by the lender.
  6. Complete the home appraisal: The lender may require a home appraisal to assess the property's value.
  7. Proceed to closing: Review the loan documents, pay any closing costs, and sign the final loan documents [[6]].

Frequently Asked Questions

Q: What is a rate lock? A: A rate lock allows you to secure your current mortgage rate for a specific period, protecting you from rate fluctuations during the homebuying process [[7]].

Q: What are mortgage points? A: Mortgage points are prepaid interest that you can pay upfront to lower your overall interest rate. Paying points can reduce your APR and monthly payments [[7]].

Q: What are closing costs? A: Closing costs are fees that buyers need to pay before getting a loan. These fees can include attorney fees, home appraisal fees, origination fees, and application fees [[7]].

If you're looking for the right mortgage rate, you can use Credible's online tool to compare multiple lenders and see prequalified rates in just a few minutes [[7]].

I hope this information helps! Let me know if you have any other questions.

Today's mortgage rates fall for 30-year terms | January 23 (2024)
Top Articles
Latest Posts
Article information

Author: Edmund Hettinger DC

Last Updated:

Views: 5675

Rating: 4.8 / 5 (58 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Edmund Hettinger DC

Birthday: 1994-08-17

Address: 2033 Gerhold Pine, Port Jocelyn, VA 12101-5654

Phone: +8524399971620

Job: Central Manufacturing Supervisor

Hobby: Jogging, Metalworking, Tai chi, Shopping, Puzzles, Rock climbing, Crocheting

Introduction: My name is Edmund Hettinger DC, I am a adventurous, colorful, gifted, determined, precious, open, colorful person who loves writing and wants to share my knowledge and understanding with you.