Will rates go down in December 2024?
According to a weekly survey of 100+ lenders by Freddie Mac, the average mortgage interest rates increased slightly week over week — 30-year fixed rates went up (6.60% to 6.72%) as did 15-year fixed rates (5.84% to 5.92%).
VA rates are no different. However, when compared to other loan types — conventional and FHA, for example — VA home loans offer consistently lower rates than for the average consumer. In May of 2023 average VA rates were between 0.21% and 0.27% lower than conventional and FHA rates, respectively
Shop and compare your personalized rates with multiple lenders (Dec 21st, 2024)VA Mortgage Rates 2025
| VA | Conventional | FHA | |
| December 2023 | 6.33% | 6.82% | 6.80% |
| November 2023 | 6.93% | 7.36% | 7.11% |
| October 2023 | 7.34% | 7.62% | 7.39% |
| September 2023 | 6.90% | 7.20% | 7.07% |
| August 2023 | 6.99% | 7.12% | 6.22% |
Source: Economic Research Federal Reserve Bank of St. Louis
How to find your lowest interest rate
The interest rate available to you will depend on the specifics of your financial situation. Shopping for the best interest rate isn’t just a matter of looking at the rates lenders have posted online because those rates won’t necessarily be available to all borrowers.
The rate lenders can offer you will depend on:
- Your credit score and credit history
- The size of your down payment or existing equity
- Your loan-to-value ratio (LTV)
- Your debt-to-income ratio (DTI)
You will need to fill out a loan application to find out what interest rate the lender can offer you. After the lender has verified your financial information, they can give you a quote for an interest rate that reflects your financial situation.
It’s best to get at least three to five of these quotes and compare them. You should look for the lowest interest rate — but you’ll also want to consider APR and estimated closing costs.
Shopping around for the best mortgage rate available to you can help you to save thousands of dollars over the life of your mortgage.
What does it mean to “lock” a mortgage rate?
A mortgage lock involves a commitment by you and your lender. When you request a lock, your lender agrees to give you that rate, even if interest rates increase. On the other hand, you are also making a commitment to close at that rate, even if interest rates fall.
What does it cost to lock your rate?
The longer your rate lock, the higher the risk to the mortgage lender, which means you’ll pay to lock a mortgage rate. With most lenders, the standard lock period is 30 days. They quote rates assuming a 30-day lock.
By locking 7 to 15 days before closing, you will typically get better pricing. For instance, one national lender’s rate sheet charges .15 percent more for a 30-day lock than it does for a 15-day lock, and .25 percent more for a 45-day lock.
For a $300,000 home loan, it would cost an extra $750 to lock a rate for 45 days instead of 15.
The cost can get even higher if you choose to lock your rate for 60 days or more.
What about “free” rate lock?
When lenders were experiencing very high volume, refinance processing suffered. Purchases get priority with most lenders, and refinance transactions can end up on the back burner.
This can result in “blown locks” for refinances. To counter this and avoid angering customers, some lenders offered “free” locks of up to 90 days. However, they weren’t really free, because the rate for those loans was slightly higher than it was for purchases.
When you get mortgage quotes for a refinance or purchase, make sure you know what lock period you’re getting on your quote. That way you can make a valid comparison.
When should I lock in my mortgage rate?
The best strategy for locking in your mortgage rate will depend on a couple of factors and your own preferences. You have a few options. There are three schools of thought about locking in a mortgage rate.
Some borrowers like to “set and forget” their rate, and they are averse to risking a higher rate in order to perhaps obtain a lower one. These borrowers are likely to lock their rate when they see an acceptably low rate.
Other borrowers are willing to take a little more risk for the chance of getting a lower rate — watching rates carefully to see if they drop.
Finally, there are the ones who want it all. These borrowers buy a “float down” option, which allows them to lock in a rate, protecting them from potential rate increases. However, if interest rates fall while their loan is in process, they can get a lower rate.
Float downs: Know what you’re buying
There are rules for float downs. Some lenders only let you exercise the float down option the day they draw your closing documents. Others allow you to lock in a lower rate anytime during the process.
Still, others require the new rate to be at least a certain percentage lower than your locked rate before they let you switch — typically .125 to .25 percent.
Read your documents carefully, and understand what a float down will cost you since these agreements are not standardized.
Find the right mortgage rate for you
Ultimately, the best mortgage rate for you is going to depend on the circumstances of your financial situation and market conditions. By comparing your options and speaking to different lenders, you can ensure that you’re getting the right mortgage. for your home goals.
Shop and compare your personalized rates with multiple lenders (Dec 21st, 2024)
