A mortgage is simply the act of giving an interest in a real property to a lender, usually a bank, as collateral on a loan. People often use a mortgage when they first buy a house, so that they need only have a small portion of the total cost on hand. The bank then has rights to the property should they default on their loan, and the borrower is able to eventually pay off their debt and own their house fully. People may also use a mortgage after they’ve already bought a house, as a way of getting access to large chunks of money for things like home improvements, business costs, or education.
Like any loan, interest is charged on the amount borrowed, so that the lender makes a profit over the lifetime of the loan, and protects themselves against a percentage of their borrowers defaulting on their loans. Current mortgage rates are relatively low compared to historic values, although not as low as they have been. Current mortgage rates are also fluctuating somewhat, as the credit landscape, especially around housing and land, has shifted fairly drastically in the recent past.
There are a number of online services that will give up-to-date current mortgage rates, although they may vary from lender to lender, and depending on the credit-worthiness of the borrower. Current mortgage rates also vary depending on the terms of the loan, including the length and other aspects. For example, the average APR on a 30-year fixed mortgage might be 5.38%, while the average APR on a 20-year fixed mortgage might be 5.60%, and the average APR on a 15-year fixed mortgage might be 4.88%. Similarly, a VA 30-year fixed mortgage might have an APR of 5.99%, while a VA 15-year fixed might have an APR of 6.28%. Home equity loans are often for shorter terms, and may have even lower current mortgage rates, with, for example, a 10-year home equity loan having an APR of 4.99%.
These numbers are roughly equal to current mortgage rates, and are quite a bit different from what they have historically been. For example, in March of 1992 the average fixed 30-year mortgage had an APR of 8.85%, in March of 1994 the average fixed 30-year mortgage had an APR of 7.51%, in March of 1998 the average fixed 30-year mortgage had an APR of 7.08%, and in March of 2002 the average fixed 30-year mortgage had an APR of 7.18%. As you can see, current mortgage rates are extremely low in a historical context, with savings of up to 2-3%.
Most banks will happily take a quick look at your finances and credit score and give you an estimate of what current mortgage rates will be for you. Your credit score will affect the rate you get drastically. For example, if you have high credit, with a score of more than 760, you could expect a rate in the current market in the 5% range; a score between 660 and 699 would land you more in the 6% range, a score between 620 and 659 would land you in the 7% range, between 580 and 619 in the 8.5% range, and a score of less than 580 would have you paying between 9% and 11%.
