Mortgage rates: How to get the best interest rate

Mortgage rates are a crucial factor for anyone looking to finance a home in the United States. A small variation in interest rates can mean saving or spending thousands of dollars over the years. With the housing market constantly influenced by Federal Reserve decisions, inflation, and global economic factors, keeping track of rates and understanding how to secure the best deal is essential for any homebuyer.

In this article, we’ll explore how mortgage rates work, what trends to expect in 2025, and strategies to secure the best possible rate. Additionally, we will provide trusted official links so you can access up-to-date information from reliable sources.

What are mortgage rates and how do they work?

Mortgage rates represent the cost of borrowing money to buy a home. When you take out a home loan, the bank or financial institution charges interest on the amount borrowed, and this rate can vary based on several factors, including your credit score, down payment amount, and loan term.

There are two main types of mortgage rates in the U.S.:

• Fixed-rate mortgage: The interest rate remains the same for the entire loan term, typically 15 or 30 years.
• Adjustable-rate mortgage (ARM): The interest rate can change after an initial fixed period, adjusting periodically based on market indexes.

Another key factor in evaluating a mortgage is the APR (annual percentage rate), which represents the total cost of the loan, including not only interest but also additional loan fees.

For a detailed explanation of APR and mortgage rates, check the official guide from the Consumer Financial Protection Bureau (CFPB): cfpb.gov

Current mortgage rates in the US: trends and forecast for 2025

Mortgage rates are influenced by various macroeconomic factors. The Federal Reserve, for example, adjusts the benchmark interest rates to control inflation and economic growth. When the Fed raises interest rates, mortgage rates generally become more expensive, impacting homebuyers.

Mortgage rate trends for 2025

According to market analysts and financial institutions, 2025 mortgage trends will largely depend on inflation and Federal Reserve decisions. Some forecasts suggest that if inflation continues to decline, the Fed may start lowering rates, which would make mortgages more affordable.

Current mortgage rates (as of February 2025):

• 30-year fixed mortgage: 6.76%
• 15-year fixed mortgage: 5.98%
• 5/1 adjustable-rate mortgage (ARM): 6.50%

 To track real-time mortgage rates, visit Freddie Mac and Federal Reserve.

Fixed vs. adjustable mortgage rates: which one should you choose?

Choosing between a fixed-rate or adjustable-rate mortgage depends on your financial profile and how long you plan to stay in the home.

Benefits of a fixed-rate mortgage

Predictability: Monthly payments remain the same over time
Protection against market interest rate increases
Best for those planning to stay in the home for many years

Benefits of an adjustable-rate mortgage (ARM)

Typically starts with a lower interest rate in the first few years
Can be beneficial if you plan to sell or refinance before the rate adjusts
Best for those comfortable with potential rate fluctuations

To make a more informed decision, it’s essential to calculate the long-term impact of each option. You can use tools from Fannie Mae to simulate different scenarios.

How to qualify for the best mortgage rates

Securing the lowest mortgage rate is not just about timing; it also depends on your financial health and creditworthiness. Lenders assess various factors to determine the interest rate they will offer. By improving these aspects, you can increase your chances of getting a lower rate and saving money over the life of the loan.

Key factors that influence mortgage rates

1. Credit score – The higher your score, the lower the risk for lenders, which means better rates. A credit score above 740 typically qualifies for the best mortgage rates.
2. Debt-to-income ratio (DTI) – Lenders prefer a DTI below 36%, meaning your monthly debts should not exceed 36% of your gross income.
3. Down payment amount – A higher down payment (20% or more) reduces lender risk and can lead to better rates.
4. Loan term – Shorter-term loans (such as 15 years) often have lower interest rates than 30-year loans.
5. Employment and income stability – Having a steady job history and consistent income reassures lenders that you can manage mortgage payments.

Check your credit score for free and learn how to improve it at Experian and Equifax.

Where to find the best mortgage rates today?

Finding the best mortgage rate requires research and comparison across different lenders. Many tools can help you compare real-time mortgage rates from banks, credit unions, and online lenders.

Best places to compare mortgage rates

• Banks and credit unions – Traditional banks (Chase, Wells Fargo, Bank of America) and credit unions often offer competitive rates.
• Online mortgage lenders – Companies like Rocket Mortgage, Better.com, and LoanDepot provide quick digital applications with real-time rate comparisons.
• Mortgage brokers – A broker can shop for loans on your behalf, sometimes finding deals that aren’t publicly advertised.
• Government resources – Official platforms like Bankrate and Zillow Mortgage Marketplace allow you to compare live mortgage rates.

Tip: Always request a Loan Estimate from multiple lenders to compare interest rates, fees, and loan terms.

How to lock in a low mortgage rate

Once you find a favorable mortgage rate, it’s crucial to lock it in to avoid potential market fluctuations that could increase your costs.

What is a mortgage rate lock?

A mortgage rate lock is a commitment from your lender to hold your agreed interest rate for a specific period (typically 30–60 days) while your loan is processed.

Steps to lock in a mortgage rate

1. Shop around and compare offers – Secure the best rate before proceeding with an application.
2. Get a written confirmation – Ensure the lender provides written documentation of your locked rate.
3. Confirm the lock period – Standard locks last 30 to 60 days, but longer options may be available for an additional fee.
4. Complete all paperwork quickly – Delays in processing could lead to losing the locked rate.

Check the latest rate lock guidelines at Mortgage Bankers Association.

How to reduce mortgage costs over time

Securing a low interest rate is just the beginning. There are several strategies homeowners can use to reduce the total cost of their mortgage over the years, saving thousands of dollars.

1. Make extra payments

Even small additional payments toward your mortgage principal can significantly reduce the total interest paid over time. Some ways to do this include:
Biweekly payments: Instead of paying monthly, split your payment into two biweekly installments, resulting in one extra mortgage payment per year.
Round up your payments: If your mortgage payment is $1,450, consider paying $1,500 each month to gradually reduce your balance.
Lump-sum payments: Apply any financial windfalls—such as bonuses, tax refunds, or inheritances—toward the principal to shorten your loan term.

2. Refinance at a lower interest rate

Refinancing your mortgage can help lower your interest rate and monthly payment, especially if market rates have dropped since you first secured your loan. Before refinancing, consider:
Closing costs: Factor in the fees associated with refinancing to ensure it’s a financially beneficial move.
Break-even point: Calculate how long it will take for the savings from the lower interest rate to exceed the refinancing costs.
Loan term adjustments: Opting for a 15-year loan instead of a 30-year can significantly reduce interest paid over the life of the loan.

To check if refinancing is a good option for you, visit Fannie Mae’s refinancing guide.

3. Avoid private mortgage insurance (PMI)

If you put down less than 20% on your home, lenders typically require you to pay private mortgage insurance (PMI), which can add hundreds of dollars to your mortgage payment. To eliminate PMI faster:
Make extra principal payments to reach 20% equity sooner.
Request PMI removal once your loan-to-value (LTV) ratio reaches 80%.
Refinance your loan if your home value has increased, reducing your LTV ratio.

4. Negotiate property taxes and homeowners insurance

Property taxes and homeowners insurance are significant components of mortgage payments. Some strategies to lower these costs include:
Appeal your property tax assessment if your home is valued higher than comparable properties in your area.
Shop around for homeowners insurance to find the best coverage at the lowest price.
Bundle your home and auto insurance with the same provider to receive discounts.

Visit the National Association of Home Builders (NAHB) for more tips on managing homeownership costs.

Finding the best mortgage rate requires a mix of timing, financial preparation, and market research. With mortgage rates fluctuating due to economic conditions and Federal Reserve policies, staying informed is crucial.