How Often Should You Compare Mortgage Rates?

How often should you compare mortgage rates?

You can compare mortgage rates as often as you’d like, especially if you’re looking for a preapproval soon or interested in rate trends. Here are some scenarios when it makes sense to compare:

• Buying a home: Before you begin shopping for homes, compare rate offers and lenders. When you’re ready to get preapproved, aim to submit requests on the same day, with the same credit and financial information, to get the fairest comparison between lenders.
• Ahead of closing day: Even after you find a home, it can still make sense to keep an eye on rate movement, says Brian Shahwan, vice president, mortgage banker and broker at William Raveis Mortgage, especially if you have a float-down rate lock. This option allows you to take a lower rate if rates fall in the time between locking your initial quote and closing. “I would recommend finalizing the rate around one week prior to closing to maintain the same closing date,” Shahwan says. “Adjusting the rate within one week of closing may push back the closing date as the loan will need to be redisclosed and closing costs rebalanced.”
• Refinancing: If you’re looking to refinance specifically for a lower rate, keep tabs on the mortgage market more frequently. This could help improve your odds of getting a better rate and saving money.

How often do mortgage rates change?

Mortgage interest rates are in constant flux and can change daily and even more often. These changes might be minor or more variable depending on what’s happening in the broader economy.

“During periods of high economic market volatility, mortgage rates can be vastly different day by day and lender by lender,” Shahwan says. “Although most banks post rates at the start of the day and maintain those rates until the following day, it is not uncommon for banks to reprice throughout the day if there’s a sudden change due to economic factors.”

Bankrate monitors this variability on a weekly basis in our Mortgage Rate Variability Index. The closer the index reading is to 10, the more variable rates are, and the more important it is to shop rate offers.

What factors determine mortgage rates?

Mortgage rates can change for many reasons, including:

• Economic conditions
• Inflation
• U.S. Treasury bonds, particularly 10-year Treasury notes
• Federal Reserve policy
• Global events like a natural disaster or war

For 30-year fixed mortgage rates, the closest parallel is often the 10-year Treasury yield. Fixed mortgages typically follow this yield with a margin or spread.

Your own mortgage rate is also influenced by:

• Your mortgage lender
• Your credit score
• Your debt-to-income (DTI) ratio
• Down payment
• Loan size
• Property type

Considerations when comparing mortgage rates

Your mortgage rate helps determine how much you pay each month for the loan, as well as your total interest charges over the length of the mortgage. As you compare mortgage rates, here are some questions to consider:

What loan do you qualify for?

Different loan types carry different interest rates, so make sure you’re comparing apples to apples based on the type of mortgage you can be approved for. For example, adjustable-rate loans typically start with a lower rate than fixed-rate loans — though that could change after the initial period — and 15-year loans tend to come with lower rates than 30-year loans. There’s a difference, too, between the rates for loans for a single-family home versus a condo or other property types, or an investment property, vacation home or primary residence.

How much are you putting down?

The higher your down payment, the better your chances of scoring a lower interest rate. Instead of estimating during the preapproval process, make sure you know exactly how much you’re putting down so you can get an accurate quote from the lenders you’re considering.

What’s a “good” mortgage rate?

Because mortgage rates change daily, it can be hard to know if the rates you find are the lowest you could possibly get. Each day, Bankrate provides national average rates for a variety of loan types. You can use this information to judge whether an offer is a “good” one, or if there might be better choices out there.

Remember, though, that any actual rate offers you receive are based on your credit score, income and more. The more you shop around, the easier it will be to understand what a good rate is for your credit and financial profile.

What is the APR?

The terms “interest rate” and “APR” are often used interchangeably, but they’re not the same thing. Both are expressed as percentages, but the interest rate on a mortgage represents the interest charged on the loan principal, or the amount you’re borrowing. In contrast, the APR, or annual percentage rate, indicates the yearly cost of the loan, including the interest and some fees. The APR is a more accurate picture of your all-in cost, and is always higher than the interest rate.

By law, lenders are required to disclose the APR on a loan offer, but they might only include some of the costs in the APR that’s advertised. You can ask what fees the lender factored into the APR and use that information when comparing your options.

What are the closing costs and fees?

Some lenders have flexibility when it comes to closing costs like the origination fee. Your lender might be able to waive a certain cost altogether, like the appraisal or application fees. It can be helpful to know this information when making your comparisons.

Are you paying for mortgage points?

In some cases, the APR a lender quotes you includes mortgage points, optional fees you pay at closing in exchange for a lower interest rate. Each point usually costs 1 percent of the total loan amount and lowers your interest rate by 0.25 percent. Depending on how the math works out, it might not be worth paying points, so compare these scenarios carefully.

What’s your timeline?

Once you find a rate you like, you can lock it in so it won’t change as you shop for homes. Locked-in rates are typically valid for 30 to 60 days, but sometimes up to 120 days. However, if you’re not planning to close on a mortgage within that time, it might be best to continue to keep an eye on rates without taking the step to lock one in.

Have you already locked a rate?

If you’ve already locked in a rate, you can still continue to compare mortgage offers, but lenders typically won’t allow you to break the lock without paying a fee. If your lock doesn’t have a float-down provision, you won’t be able to take advantage of lower rates at all unless you restart the mortgage process with a new lender. Depending on the difference in rate, though, it can be worth it.

Note that if you’re working with a mortgage broker, the broker can do some of this work for you. Brokers work with a wholesale lender or multiple lenders to help you find the best possible rate. However, it’s also a good idea to do your own research so you can compare against what your broker provides.