What mortgage rate will I get compared to the average?

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Mortgage rates remain low by historical standards, making it a great time to lock in a rate. But with mortgage rates, what you see may not be what you get.

The rate you’ll get compared to the average rate depends on a number of factors, including your credit, down payment and loan type. Current economic conditions even play a part, and right now lenders are responding to the weakened economy and job market with stricter lending requirements.

Currently, the average 30-year fixed-rate loan sits at 3.56 percent, while the average 15-year fixed-rate mortgage is 2.91 percent, according to Bankrate’s weekly national survey of average rates in major markets across the country. The last time rates were this low was in 2016.

“Lenders are tightening, expecting a slightly riskier lending environment with the potential for borrowers to require forbearance or go delinquent,” says Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association.

Stiffer lending requirements can impact the loan offerings that are available to borrowers, and in some cases it might push rates higher, says Kan. That’s especially so for borrowers with lower credit scores and high loan-to-value ratios (LTVs).

“Relative to the posted rate, there’s going to be an adjustment based on the borrower’s profile, where the property is located and the kind of loan,” says Kan.

Factors that influence your mortgage rate

Your credit score is one of the biggest factors of the rate you’ll receive. That’s because interest rates are set partially based on your riskiness as a borrower. Lenders see borrowers with higher credit scores as less likely to default on their loans, and less risk generally translates to lower mortgages rates.

Right now borrowers with scores above 720, on average, are getting mortgage rates 78 basis points lower than those with scores below 660, according to a recent report by the Urban Institute. The gap jumps up higher in the nonbank space, increasing to 83 basis points.

At first glance, 78 basis points might not seem like a big difference, but it adds up quickly.

For example, let’s say you borrow $200,000 at 3.5 percent on a 30-year, fixed-rate loan. You’d pay $898 per month in principal and interest and more than $123,000 in interest over the life of the loan. An interest rate of 4.3 percent moves your monthly payment up to $989 and your total interest to more than $156,500.

You can use a mortgage calculator to play around with interest rates, down payment amounts, loan amounts and other considerations to see how various factors influence your payment and interest.

Credit, of course, is only one of the ways in which lenders determine risk and the mortgage rate you receive. Here are some big factors that influence your rate:

Having a 20 percent down payment marks you as a less risky borrower, which means you’ll often receive a lower rate.

You can also get a lower rate by paying closing costs and other borrower fees upfront, instead of rolling them into your loan.

And short-term loans tend to come with lower rates as well, since you’re paying the mortgage off faster. This means less risk for the lender.

How to shop for the best mortgage rates

One way to get a great rate and an estimate of the rate you’ll receive is to shop at multiple lenders. Keep in mind that different lenders may charge different rates to the same person based on the same information. So look at more than just your local bank or credit union — grab quotes from online lenders, too.

You can start out by comparing mortgage rates from top lenders throughout the nation based on your location, mortgage type, down payment, credit score and loan term.

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