Rates continue to inch down

Almost all mortgage rates have dropped. The 30-year fixed rate is 6.50%, and the 15-year fixed rate is 5.75%.

Mortgage rates have been ticking down for days — but you’re probably wondering when mortgage rates will go down enough to make a noticeable impact on your monthly payments. When will rates plummet?

The answer? Probably not in 2024 — but possibly in 2025. The Federal Reserve should only cut the federal funds rate once this year; however, it will likely slash the rate four times in 2025. When the federal funds rate falls, mortgage rates tend to follow suit.

Read more: Mortgage rates dip below 7%, but meaningful declines are still months away

Current mortgage rates

Here are the current mortgage rates, according to the latest Zillow data:

• 30-year fixed: 6.50%

• 20-year fixed: 6.08%

• 15-year fixed: 5.75%

• 5/1 ARM: 6.66%

• 7/1 ARM: 6.56%

• 30-year FHA: 5.91%

• 15-year FHA: 5.89%

• 30-year VA: 5.84%

• 15-year VA: 5.28%

• 5/1 VA: 6.08%

Remember, these are the national averages and rounded to the nearest hundredth.

Learn more: Is it a good time to buy a house?

30-year vs. 15-year fixed mortgage rates

The average 30-year mortgage rate today is 6.50%. A 30-year term is the most popular type of mortgage because by spreading out your payments over 360 months, your monthly payment is lower than with a shorter-term loan.

The average 15-year mortgage rate is 5.75% today. When deciding between a 15-year and a 30-year mortgage, consider your short-term versus long-term goals.

A 15-year mortgage comes with a lower interest rate than a 30-year term. This is great in the long run because you’ll pay off your loan 15 years sooner, and that’s 15 fewer years for interest to accumulate. But the trade-off is that your monthly payment will be higher as you pay off the same amount in half the time.

Let’s say you get a $300,000 mortgage. With a 30-year term and a 6.50% rate, your monthly payment toward the principal and interest would be about $1,896 and you’d pay $382,633 in interest over the life of your loan — on top of that original $300,000.

If you get that same $300,000 mortgage but with a 15-year term and 5.75% rate, your monthly payment would jump up to $2,491 — but you’d only pay $148,421 in interest over the years.

Fixed-rate vs. adjustable-rate mortgages

With a fixed-rate mortgage, your rate is locked in for the entire life of your loan. You will get a new rate if you refinance your mortgage, though.

An adjustable-rate mortgage keeps your rate the same for a predetermined period of time. Then, the rate will go up or down depending on several factors, such as the economy and the maximum amount your rate can change according to your contract. For example, with a 7/1 ARM, your rate would be locked in for the first seven years, then change every year for the remaining 23 years of your term.

Adjustable rates typically start lower than fixed rates, but once the initial rate-lock period ends, it’s possible your rate will go up. Lately, though, fixed rates have been starting lower than adjustable rates.

Dig deeper: Adjustable-rate vs. fixed-rate mortgage

How to get a low mortgage rate

Mortgage lenders typically give the lowest mortgage rates to people with higher down payments, great or excellent credit scores, and low debt-to-income ratios. So if you want a lower rate, try saving more, improving your credit score, or paying down some debt before you start shopping for homes.

Waiting for rates to drop probably isn’t the best method to get the lowest mortgage rate right now unless you are truly in no rush and don’t mind waiting until the end of 2024 or into 2025. If you’re ready to buy, focusing on your personal finances is probably the best way to lower your rate.

Learn more: How to get the lowest mortgage rates

How to choose a mortgage lender

To find the best mortgage lender for your situation, apply for mortgage preapproval with three or four companies. Just be sure to apply to all of them within a short time frame — doing so will give you the most accurate comparisons and have less of an impact on your credit score.

Dig deeper: Best mortgage lenders for first-time buyers

When choosing a lender, don’t just compare interest rates. Look at the mortgage annual percentage rate (APR) — this factors in the interest rate, any discount points, and fees. The APR, which is also expressed as a percentage, reflects the true annual cost of borrowing money. This is probably the most important number to look at when comparing mortgage lenders.