Mortgage and refinance rates today, Jan. 24, 2023

Today's mortgage and refinance rates

Average mortgage rates edged a little higher yesterday. There's been a run of rises since, appropriately, Friday the 13th and they're undeniably higher than they were that morning. But they're drifting rather than responding to anything obvious.

So far this morning, it's looking as if mortgage rates today might be unchanged or barely changed. But that might not last all day.

Find your lowest rate. Start here (Jan 25th, 2023)

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don't change daily to reflect fleeting sentiments in volatile markets.

Here are my personal rate lock recommendations, which I updated on Saturday:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• FLOAT if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.

Why are the first two recommendations still to lock? Because there's too much risk of volatility to take chances so near to closing. Of course, if you're happy with that risk, float away.

Market data affecting today's mortgage rates

Here's a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes edged higher to 3.55% from 3.51%. (Bad for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
• Major stock indexes were mostly lower soon after opening. (Sometimes good for mortgage rates.) When investors buy shares, they're often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
• Oil prices decreased to $81.73 from $82.04 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices edged up to $1,931 from $1,917 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy.
• CNN Business Fear & Greed index — nudged up to 65 from 63 out of 100. (Bad for mortgage rates.) "Greedy" investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while "fearful" investors do the opposite. So lower readings are often better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve's interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that's no longer the case. We still make daily calls. And are usually right. But our record for accuracy won't achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to hold steady or close to steady. However, be aware that "intraday swings" (when rates change speed or direction during the day) are a common feature right now.

Find your lowest rate. Start here (Jan 25th, 2023)

Important notes on today's mortgage rates

Here are some things you need to know:

1. Typically, mortgage rates go up when the economy's doing well and down when it's in trouble. But there are exceptions. Read 'How mortgage rates are determined and why you should care'
2. Only "top-tier" borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you'll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

The next decisive movement in mortgage rates might occur on Thursday or Friday when new reports about gross domestic product and inflation are due.

Or markets might shrug those off. In that case, it could be the next Federal Reserve rate hike on Feb. 1 that sends those rates higher or lower.

Either way, we seem for now (and barring unexpected events) to be in a period of drifting mortgage rates. So let's take the opportunity to examine a very significant potential danger a few months hence.

Debt ceiling

You've probably seen reports in the media about a looming debt ceiling crisis. The United States is unusual in facing those because they involve Congress raising the nation's borrowing limit to pay for expenditures already approved by … er, Congress.

Most legislatures around the world know that authorizing more spending usually means authorizing more debt. And they simply don't vote for measures if they don't want to pay for them.

Anyway, the debt ceiling is a thing in America. And it has the potential to do untold damage to the economy. That damage is partly untold because the debt ceiling has always been raised before the country runs out of money. So we literally don't know what will happen if it's not increased.

But economists are pretty much unanimous in predicting dire consequences. That's partly because the U.S. Treasury will almost certainly default on its debt payments. Those mostly take the form of Treasury bills, notes and bonds. They're currently seen as the safest investment in the world but they probably won't be in the event of an intentional default.

Many expect a meltdown in the global economy in the event of such a default. That's because Treasury securities are often used as collateral for debts within America and around the world. And the devalued collateral might easily see many such loans called in early, triggering mayhem.

Timing

The Treasury says it reached the debt ceiling last week. But it thinks it can keep going using emergency measures until mid-June. That's the likely trigger point unless Congress raises the ceiling.

There are two problems. First, a crucial group in the House of Representatives has vowed not to raise the ceiling unless some big cuts to several government programs are first made. And, secondly, markets will begin to respond to threats to the ceiling way before mid-June.

The last time there was a similar threat to the debt ceiling was in 2011. And that brought a:

1. Reduction in America's top-tier credit rating
2. Dramatic fall of 10.8% in the S&P stock index over just 10 trading days
3. Fall in the perceived value of Treasury bonds — Suddenly and unprecedentedly, they were rated lower than those offered by competitor countries such as Canada, France, Germany and the UK

All that happened in advance of the debt ceiling being hit. And the closer to a crisis Congress lets this get, the more jittery markets and financial institutions are likely to grow. Some are already adjusting their strategies in anticipation of a meltdown but the real effects will be felt in the coming months.

What this means for mortgage rates

A week or so ago, I mentioned the debt ceiling and said failing to raise it could ultimately lead to lower mortgage rates. And it may well. Because it will likely cause a recession or depression and mortgage rates typically fall at such times.

But, between now and then, mortgage rates will probably skyrocket for a while. That's because mortgage bonds will likely be infected by a new lack of confidence in Treasury bonds.

Investors will want a higher return to allow for the new additional risk across all bonds. And that means higher mortgage rates for those loans yet to have their rates fixed.

Of course, this won't bother you if you already have a fixed-rate mortgage in place — unless you need to move or refinance. Nothing can touch your rate as long as you stay put.

But it's worrying for those hoping to move or buy their first home in the summer. If that's you, you might wish to consider bringing forward your plans. You might also decide to explore your options if you have an adjustable-rate mortgage.

Naturally, this potential crisis may simply evaporate if the House backs off. But, right now, things aren't looking good.

For more background on mortgage rates, please read the latest weekend edition of this daily rates report.

Recent trends

According to Freddie Mac's archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie's Jan. 19 report put that same weekly average at 6.15%, down from the previous week's 6.33%.

In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie's and the MBA's forecasts appeared on Jan. 20. Freddie's was published on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn't been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

"Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan."

Time to make a move? Let us find the right mortgage for you (Jan 25th, 2023)

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

How to sell your house: A complete guide for sellers

Most home sellers dream of a stress-free sale in which they simply list their house, quickly find a qualified buyer, collect the cash and hand over the keys. If only it were that simple! In reality, selling a home involves many moving parts — some that you can control, and some that are out of your hands.

For example, geography might influence how long your house lingers on the market or how much mark-up you can get away with. Where competition is high and inventory is low, odds are you'll sell faster and command a higher price. Conversely, in places where home sales have cooled, homeowners will likely have to work harder to attract the right buyer.

Given the unprecedented growth in the housing market since the coronavirus pandemic, there has been an uptick in pricing and bidding wars, and extremely low levels of inventory, over the past two years. However, the market is expected to settle down a bit — and is, in fact, already cooling considerably in some areas — due to rising interest rates (including for mortgages) and recession fears.

So, you'll want to be prepared as a seller and control the factors that could have a big impact on your bottom line. Things like hiring a great real estate agent and maximizing your home's online appeal can translate into a more seamless closing — and more money in the bank.

Here are 12 steps to take to sell your home in 2022:

1. Hire an agent who knows the market

The internet makes it simple to delve into real estate agents' sales history and professional designations, so you can choose the right person to work with. Look up agents' online profiles to learn how long they've been in the industry, how many sales they've done and what designations they may have earned. Pay attention to how and where they market their listings, and whether or not they use professional photos.

"Any designation they've earned is a huge plus, because it's a sign they've taken the time to learn about a particular niche," says Jorge Guerra, Global Liaison for the National Association of Realtors.

Some homeowners might be tempted to save on paying a commission and instead sell their home themselves, without an agent. This is known as "for sale by owner," or FSBO. The amount sellers stand to save on those fees can be thousands of dollars, usually 5 percent or 6 percent of the total sale price.

However, an experienced agent does a lot to earn their fee. For example, they can expose your house to the broadest audience and negotiate on your behalf to garner the best offers possible. If you go it alone, you'll have to personally manage prepping your home, marketing it, reviewing buyers' offers and handling all the negotiations and closing details.

When working with an agent and negotiating a commission, keep this in mind: Real estate fees have fallen to all-time lows. So you might be able to get a break at the closing table.

2. Set a timeline for selling your home

Selling a house is a major undertaking that can take two to four months from start to finish — or much longer, depending on local market conditions and the level of inventory available.

As soon as you decide to sell your house, jump right into researching real estate agents to find someone with the right experience for your situation.

At least two or three months before you plan to list, consider getting a pre-sale home inspection (more on that below!) to identify any problem areas, especially structural or mechanical issues that might need addressing to facilitate a sale. Leave enough time to schedule necessary repairs.

About a month before listing your house, start working on staging and deep cleaning in preparation for taking photos.

Here's a checklist of things to do before listing your home:

• Research and interview real estate agents.
• Declutter, perhaps moving excess items to a storage unit.
• Get an optional home inspection to identify any issues.
• Schedule repairs if needed.
• Deep clean.
• Stage the house.
• Have professional photos taken.

3. Get a pre-sale home inspection

A pre-sale home inspection is optional, but it can be a wise upfront investment. A detailed inspection report can identify any structural or mechanical problems before you list your home for sale. It may cost a few hundred dollars, but it will alert you in advance of issues that buyers will likely flag when they do their own inspection later in the process.

By being a few steps ahead of the buyer, sellers might be able to speed up the selling process by doing repairs in tandem with other home prep work. This means by the time the house hits the market, it should be ready to sell, drama-free and quickly.

4. Don't waste money on needless upgrades

If you're going to spend money on costly upgrades, make sure that the changes you make have a high return on investment. It doesn't make sense to install new granite countertops, for example, if you only stand to break even or even lose money on them. Plus, these improvements may not be necessary to sell your home for top dollar, particularly if inventory levels are low in your area.

Here's where a good real estate agent can help guide you. They often know what people expect in your area and can help you plan upgrades accordingly. If local shoppers aren't looking for super skylights or a steam shower, then it doesn't make sense to add them. A fresh coat of neutral paint, new carpet and a spruced-up landscape are typically low-cost ways to make a great first impression.

In general, updates to the kitchen and bathrooms provide the highest return on investment. If you have old cabinetry, you might be able to simply replace the doors and hardware for an updated look. For example, you can swap out those standard-issue kitchen cabinet doors for modern, Shaker-style doors in a weekend without breaking the bank.

5. Get professional photos

Work with your real estate agent to schedule a photographer to capture marketing photos of your home. High-quality photos are critical, since maximizing your home's online appeal can make all the difference between a quick sale or a listing that languishes.

Some real estate agents build professional photography and virtual online tours into their suite of services. If they don't, though, you might want to seek a photographer out on your own. The fee for professional photography will vary based on the size of your home, its location and how long it takes to shoot the property.

A professional photographer, with a strong portfolio, knows how to make rooms appear bigger, brighter and more attractive. The same goes for your lawn and outdoor areas. Dimly lit online photos can turn off homebuyers before they even have a chance to read about the lovely bike path nearby or the new roof you just installed, so well-taken photos can really pay off

6. Put your house on the market

Here are tips to get your home market-ready and attract buyers for a speedy sale:

Focus on the home's online appeal

You've probably heard of curb appeal, but professionals say online appeal is now even more important. "Your home's first showing is online," Guerra says. "The quality of your web presentation will determine whether someone calls and makes an appointment or clicks on the next listing."

Stage it and keep it clean for showings

Real estate agents will often suggest that sellers stage their homes. Staging a home simply means removing excess furniture, personal belongings and unsightly items from the home while it's on the market, and arranging rooms for optimal flow and purpose. If you're in a slower market or you're selling a luxury home, investing in a professional stager could help you stand out. Nationally, professional home staging costs an average of around $1,728, according to HomeAdvisor, but prices can range between about $749 and $2,825.

Let someone else show the house

Make yourself scarce when potential buyers come to view your home. Let them imagine themselves in the space, free from the distraction of meeting and talking to you. Generally, buyers are accompanied by their own real estate agent to view your home. You can also ask your own agent to be present at showings.

"Seeing the current homeowner lurking can cause buyers to be hesitant to express their opinions," says Grant Lopez, Realtor at KW Heritage and former chairman of the San Antonio Board of Realtors in Texas. "It could keep them from really considering your home as an option."

7. Set a realistic price

Even in competitive markets, buyers don't want to pay more than what the comparables, or "comps" show, so it's crucial to get the pricing right. Going too high can backfire, while underestimating a home's value might cause you to leave money on the table.

To price your home right from the start, consult your neighborhood's comps. These are data sheets about recently sold properties in a specific area. At a glance, you can get an idea of what homes around you are selling for.

"A frequent mistake sellers make is pricing a home too high and then lowering it periodically," Lopez says. "Some sellers think this practice will yield the highest return. But, in reality, the opposite is often true. Homes that are priced too high will turn off potential buyers, who may not even consider looking at the property."

In addition, homes with multiple price reductions may give buyers the impression there's something wrong with your home's condition, or that it's undesirable. So it's best to eliminate the need for multiple reductions by pricing your home to attract the widest pool of buyers from the start.

8. Review and negotiate offers

After your home officially hits the market and buyers have seen it, ideally the offers will start rolling in. This is where a real estate agent (or attorney) is your best advocate and go-to source for advice. If your local market is competitive and favors sellers, buyers will likely offer at or above asking price. You might even get multiple bids. On the other hand, if sales are slow in your area and you don't get many offers, you may have to be open to negotiating.

When you receive an offer, you have a few choices: Accept the offer as it is, make a counteroffer or reject the offer.

A counteroffer is a response to an offer, in which you negotiate on terms and price. Counteroffers should always be made in writing and have a short timeframe (48 hours or less) for the buyer to respond. You can offer a credit for paint and carpet, but insist on keeping your original asking price in place, for example. Or, you might offer to leave behind certain appliances to sweeten the deal.

If you're lucky enough to get multiple offers, you might be tempted to simply go with the highest one. But look closely at other aspects of the offer too, such as:

• Form of payment (cash versus financing)
• Type of financing
• Down payment amount
• Contingencies
• Requests for credits or personal property
• Proposed closing date

Be mindful that if a buyer is relying on lender financing, the property has to be appraised. Any shortfall between the purchase price and appraised value will have to be made up somewhere, or the deal could fall apart.

9. Anticipate seller closing costs

Both the homebuyer and seller have closing costs. The home seller typically pays the real estate agent's commission, usually around 5 percent to 6 percent of the home's sale price.

Some other costs commonly paid by the seller include:

• Government transfer tax
• Recording fees
• Outstanding liens
• Attorney fees

Additionally, if the buyer has negotiated any credits to be paid at closing for repairs or closing costs, the seller will pay those too. Your real estate agent or the closing agent should provide you with a complete list of costs you'll be responsible for at the closing table. While the buyer typically pays a bulk of closing costs, anywhere from 2 percent to 4 percent of the sales price, be aware that you might have to pay some fees, too.

10. Weigh the tax implications

The good news is, many home sellers won't owe taxes on profits from the sale of their primary home. If you've owned and lived in your home for at least two out of the previous five years before selling it, then you will not have to pay taxes on any profit up to $250,000. For married couples, the amount you can exclude from taxes increases to $500,000. However, if your profit from the home sale is greater than that, you need to report it to the IRS on your tax return as a capital gain.

11. Gather necessary paperwork to close

There's lots of paperwork needed to properly document a home sale. Organize it all in one place to help things go more quickly. Some of the main documents you'll need to gather include:

• Your home's original purchase contract
• Property survey, certificate of occupancy and certificates of compliance with local codes
• Mortgage documents
• Tax records
• Appraisal from your home purchase
• Homeowners insurance
• Home inspection report, if you had one

12. Consider hiring a real estate attorney

Not all states require sellers to bring a real estate attorney to the closing. Hiring one could cost a couple thousand dollars, but the expense might be worth it to protect such a large financial transaction. (Especially if you're selling your home solo.)

An attorney can help fill out paperwork, review contracts and documents, identify potential issues and ensure the sale goes as smoothly as possible. An attorney would also be able to spot title issues that could hold up your sale for weeks or months — or even torpedo the deal — such as:

• Outstanding liens or judgments or other encumbrances
• Trust issues
• Mortgage balances
• Tax issues
• Encroachments

Tips for First-Time Home Buyers

Buying your first house is exciting! And wild. Homes today cost a median of $391,200 and fly off the market in just 17 days.¹ Plus, interest rates are rising fast.²

These trends may tempt you to rush into a purchase before things get any crazier. But slow down! Trust me, you guys, it's worth buying your first home the right way. That means finding one that works with your money goals—not against them.

You may be thinking, Yeah, that's great, Rachel. But I don't know how to buy a house for the first time. Where do I start?

I'm glad you asked! I put together 13 steps to buying a house for the first time. Now, I know that sounds like a lot. But this is a big deal, and you want to do it right! Put these tips into practice so your first home is a blessing, not a burden.

13 Steps to Buying a House for the First Time

Okay, when you asked for first-time home-buyer tips, you probably didn't expect this one. But it is hands down the most important.

Owning a home is much more expensive than renting, even if your monthly house payment will be less than your current rent. When you're a homeowner, you're responsible for everything. All the maintenance and mishaps add up fast!

Before you even think about buying your first home, get debt-free and save an emergency fund of three to six months of expenses. Then, your money won't be tied up in monthly payments, and you'll have cash to cover unexpected costs.

Avoiding Debt as a First-Time Home Buyer

Once you're debt-free, I want you to stay that way. (Minus the mortgage. More on that in a minute.) So even though you're excited about decorating, it can wait.  

I'm a spender, so I know that's easier said than done. But it's okay to let a room sit empty until you can afford to furnish it. Stick with the good money habits you learned while getting out of debt. Your future self will thank you.

Before house hunting, determine how much house you can afford. Your monthly housing costs—including principal, interest, property taxes, home insurance, private mortgage insurance (PMI) and homeowners association (HOA) fees—should be 25% or less of your monthly take-home pay.

For example, if you bring home $6,600 a month, your maximum house payment is $1,650. Now imagine you get a 15-year fixed-rate mortgage at 4% interest. If your property tax is 1.14%, home insurance is $1,200 per year, and PMI is 0.5% (for down payments below 20%), here are some home prices you could afford:

• $185,000 home with 5% down ($9,250)
• $194,000 home with 10% down ($19,400)
• $225,000 home with 20% down ($45,000)
• $253,000 home with 30% down ($75,900)

P.S. I got these estimates from Ramsey Solutions' free mortgage calculator. Try plugging in your own numbers to see other home prices that work with your budget.

The best down payment is an all-cash offer. Nearly 1 in 4 buyers pay cash for their houses.³ But if that isn't reasonable for your first house, then aim for a 20% down payment. That way, your lender won't make you pay for PMI. PMI is insurance that protects your lender (not you) if you fail to make payments—so try to avoid this nonsense.

If 20% is still out of reach for you as a first-time home buyer, a smaller down payment of 5–10% is okay too. But no matter what your down payment is, make sure your housing payments are no more than 25% of your monthly take-home pay on a 15-year fixed-rate mortgage. (I'll share more on mortgage types later.)

Closing costs are typically around 2–7% of your home's purchase price.⁴ Here's an example:

$300,000 home x 3% = $9,000 closing costs

That's a big chunk of change—on top of your down payment—but I promise you can do it! Tackle these savings with intensity. You can even put retirement savings on hold for a short time to save for a home.

Choosing a Mortgage

You might be thinking, Wait, Rachel. I haven't even found a home yet!

But remember the old expression, "You snooze, you lose." If you try to get a last-minute loan, you could miss out on your dream house. So it's smart to line your mortgage up before house shopping.

A huge benefit to being a first-time home buyer is that you've never fallen for an awful mortgage—and you don't have to!

Many first-time home-buyer loans only make you put a little money down, but they cost tens of thousands of dollars more in the long run. Don't fall for it! Remember—if it seems like a good deal for you right now, then it's an even better deal for your lender in the end.

Avoid these low-to-no down payment mortgage options:

• Adjustable-Rate Mortgages (ARMs): ARMs sucker you in with a low initial interest rate. But then, your lender raises your rate, and your mortgage payment goes up. No, thanks!

• Federal Housing Administration (FHA) Loans: FHA loans are popular for first-time home buyers because you can put as little as 3.5% down. But you waste thousands of dollars on mortgage insurance (similar to PMI) for the life of the loan.

• Veterans Affairs (VA) Loans: VA loans let veterans buy homes with no down payment or PMI. But they carry a bunch of fees and usually charge high interest rates.

I only recommend 15-year fixed-rate conventional mortgages. Here's why:

• Quicker payoff time – With 15-year loans, the monthly payments are higher than 30-year loans. But you'll pay off your mortgage in half the time. Plus, most 15-year loans have a lower interest rate, saving you tons of money.

• Locked-in interest rate – A fixed-rate loan keeps your interest rate the same over the life of the loan, so you pay less interest and always know what to expect.

How a 30-Year Mortgage Compares

I'll just say it: 30-year mortgages may have a lower monthly payment, but they cost more in the long run. Like tens of thousands of dollars more.

Imagine you want a $300,000 house with 20% down. You need a mortgage for $240,000. Even if the 30-year loan and the 15-year loan offered the same interest rate (unlikely, since 30-year rates are almost always higher), the 30-year mortgage still costs more.

You'll save $107,331 with a 15-year fixed-rate mortgage—and you'll be payment-free 15 years sooner. I mean, hello!

Some lenders only care about profits, while others actually care about helping you become a homeowner. Talk to at least three lenders. Compare their interest rates, fees and customer service to find the best one for your finances and peace of mind.

If you're debt-free like me, you need a lender who doesn't require a credit score. (Because you don't have one anymore—yay!) So look for one who does manual underwriting, like Churchill Mortgage.

It pays to get preapproved for a loan (not just prequalified). Preapproval is when your lender verifies your financial information and gives you a letter saying how much money you can borrow.

Preapproval shows sellers you're serious, and you can use your letter to get ahead in a competitive market.

Just know some lenders may preapprove you for a bigger loan than you can afford. But you don't have to borrow that much—or look at houses that are too expensive!

Looking for a House

Finally, we're to the fun part! Follow these first-time home-buyer tips to start looking for your new house.

One of the most important things you need to buy a house for the first time is actually a person. A good real estate agent will help you find the right home and navigate the buying process.

I always recommend working with a real estate agent. If you're not sure where to start, connect with a RamseyTrusted agent through our Endorsed Local Providers (ELP) program.

Let's be honest: Most of us aren't very good at telling the difference between what we need and what we want. So, what can you do to change that?

Know what motivates you.

It's easy to think you need a super nice house because your parents had one . . . but they worked for 30 years to get it. Or maybe you grew up in a less-than-perfect home, and you want a better one so you'll feel like you've finally "made it." 

When we take time to learn why we spend money the way we do, we can better understand what we need in a house—and what we can do without.

Be content.

When we compare ourselves and our stuff to others, we're struggling with contentment. Contentment can make us rich—and it can keep us from making bad money decisions. When you're grateful for what you already have, it'll put your house hunt into perspective.

Talk to people.

Your real estate agent has helped dozens of first-time home buyers. They can help you discern your needs and wants, set realistic expectations, and show you houses that meet your criteria.

If you're single, talk to a trusted friend who will call you out if you're being unreasonable. And if you're married, now's the time to get to know your spouse better! Be honest about what you both need and want in a home so you can find a place where you'll both be happy.

Be realistic.

As a first-time home buyer, you don't have equity in an existing house, and you may not have a ton of savings either. So you may have to make some sacrifices to stay within your budget. For instance, you may have to buy a house that needs fixing up or a smaller place where your kids share a room.

That's okay. It's tempting to think your first home is your forever home, but for most people, it isn't. You need a house to fit this season of life—and you can always sell it and upgrade later. Keep your perspective and your cool.

Make a list.

Some things really may be nonnegotiable for you—whether they're needs or wants. Maybe you need to live close enough to commute to work every day. Maybe your pets need a fence. Or maybe you want to live in a good school district for your kids.

List 3–5 things your house absolutely must have. (And yes, it's okay to put a want or two on this list.) Then, write down the nice-to-haves that could be the cherry on top of your first home.

Okay, you've got your shopping list in hand, and you're ready to roll. Here's how it's done.

Get ideas online.

Find homes you like online and send them to your real estate agent. Then, they can use the Multiple Listing Service (MLS) to find more homes that check off the boxes for you.

Home buyers don't have access to the MLS, but your real estate agent can use it to help you view the most properties for sale in your market. They can even help you find great deals on homes before they're listed.

Research neighborhoods for the best fit.

Most home buyers would rather compromise on a home's condition and size than on the quality of the neighborhood.⁵ Now, your real estate agent can't talk about crime rates, schools or demographics. (That's real estate steering, and it's illegal.) But they can tell you where to find that information for yourself.

You can also look up local schools and calculate your new commute times to see what they're like. If you can, visit the neighborhood at different times to check traffic and noise levels and see if people are comfortable being outdoors.

Once you choose the neighborhoods you like, attend some open houses. Looking at homes for sale—even if they're not perfect for you—helps you learn about the area.

Think long term.

Like I said, you probably won't live in your first home forever, so don't buy the most expensive house on the block. Future buyers who are shopping in a $200,000 neighborhood won't want a $300,000 home. But if you buy in the neighborhood's low price range, you'll have more room to build home value.

Pay attention to what's happening in the community too. Are home prices rising or falling? Are businesses booming or closing? You want a home that will be a good investment in the long run. 

Be patient.

Finding the right house takes time. More than likely, you'll look at several houses. You may even make several offers before one gets accepted. And that's okay. It's part of the process.

So keep dreaming about all the exciting possibilities that are open to you right now. Be patient and proud of the fact that you're willing to wait for the right house—not settle for the wrong one.

Buying a House for the First Time

You finally found a home you love, and you're ready to buy. Congratulations! But there are still a few more steps you have to take before you can call it home sweet home.

It can be hard to know how much you should offer for your first house. That's when you rely on your real estate agent's expertise.

Ask them to help you make a competitive offer that's within your budget and close to the home's value. Don't make an impulsive offer you can't afford just to knock out the competition.

Once the seller accepts your offer, you can close on the house. The average closing process takes 48 days.⁶ During that time, your real estate agent will help you handle the remaining steps to buying the house, and they'll inform you about any roadblocks.

Get a home inspection and appraisal.

Home inspectors can help you spot potential problems so you can fix them—or walk away from a bad deal! If you still want the house, the appraiser will assess its value. You can use the appraisal to try to negotiate a better price.  

Buy homeowners and title insurance.

Lenders require you to buy homeowners insurance, which pays to repair or rebuild your house after a disaster.

Title insurance protects your home from claims against the property or questions of ownership—like the last owner's unpaid tax bill or long-lost grandson who claims he inherited your house. It sounds crazy, but it happens. And it's why title insurance is worth every penny!

Take out a mortgage.

Once you and the seller agree to move ahead with the deal, it's time to return to the lender and get a mortgage. They'll walk you through this process. But I can't say it enough: Don't let them talk you into borrowing more than you can afford! Stick to the 25% rule. Period.

Do the final walkthrough.

Right before you finally buy your first home, you'll get to walk through it and make sure everything's as it should be. This is also your last chance to back out of the deal if something's wrong, so be thorough.

Sign all the papers (but read them first).

You're legally responsible for any papers you sign. Read every document carefully and ask your real estate agent to explain anything you don't understand so you don't end up in hot water.

Ready to Get Started?

Whew, you made it! We covered a lot of ground, so be sure to get our free Home Buyers Guide so you don't miss a thing.

Your first home is a big purchase, maybe the biggest one you've ever made! So you want to get this right. A good real estate agent will make the first-time home-buying process much easier.

Want to meet an agent you can trust? Connect with the RamseyTrusted agents in our Endorsed Local Providers (ELP) program. RamseyTrusted ELPs are top-performing agents who will help you find a home that fits your needs and budget.

Mortgage and refinance rates today, Jan. 14, and rate forecast for next week

Today's mortgage and refinance rates

Average mortgage rates barely moved yesterday, just inching higher. On Thursday, Freddie Mac published its weekly average for conventional 30-year, fixed-rate mortgages. It was 6.33% down from 6.48% a week earlier.

Some think we're entering a phase within which we will see mortgage rates move within a tighter band. But there are plenty of economic events that could change that, including another crucial inflation report on Jan. 27 and a Federal Reserve rate change on Feb. 1. So, nothing is very predictable.

Find and lock a low rate (Jan 16th, 2023)

Current mortgage and refinance rates

Find and lock a low rate (Jan 16th, 2023)

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don't change daily to reflect fleeting sentiments in volatile markets.

After a period of falling mortgage rates, I'm clearly considering changing my personal rate lock recommendations (below). But, first I wish to see how the Fed responds to Thursday's inflation report.

So, for now, those recommendations remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• LOCK if closing in 45 days
• LOCK if closing in 60 days

However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.

What's moving current mortgage rates

As economist Paul Krugman wrote yesterday for the New York Times, "Thursday's report on consumer prices was really good news. I mean, really, really good news."

Pretty much everyone will be delighted, including the Federal Reserve. But, for the Fed its joy will be tempered by some dread.

For months now, the central bank has struggled to persuade markets that they should not expect a return to low interest rates anytime soon. But investors seem to think the Fed's kidding.

And now there is a significant gap between the bank's and investors' expectations for future interest rates. Personally, I think the Fed will win this battle of expectations. Its institutional memory is still scarred by its experiences in the early 1980s.

Back then, inflation had been chronic and high — much more so than we've seen recently. And the Fed's rate hikes to rein in that inflation were sharp and sustained. And they led to a very painful recession. No wonder the bank stopped its rate increases as soon as it could.

But it stopped them too soon. Inflation was playing possum and quickly rose again. And the Fed had to start hiking rates again, triggering another recession.

That was 40 years ago and many investors seem to have forgotten the lesson. But the Fed certainly hasn't.

This looks to me as if we are due a crunch: when investors' sunny optimism crashes into the Fed's steely determination. If I'm right, we might see mortgage rates rise sharply when that crunch comes.

I don't know when that will be. However, it could be as soon as Feb. 1. That's when the central bank is due to unveil its next rate hike.

Economic reports next week

By far the most important economic report due next week concerns retail sales for December. That will show how the economy is holding up after a year of rising interest rates.

Important reports and events are shown in bold in the following list. And I doubt any others will move mortgage rates far unless they reveal shockingly good or bad data.

• Wednesday — Retail sales for December. Plus that month's producer price index (PPI) and industrial production and capacity utilization
• Thursday — Initial jobless claims for the week ending Jan. 14

Some senior Fed officials will be making speeches or media appearances next week. Markets may be especially sensitive to their remarks.

Time to make a move? Let us find the right mortgage for you (Jan 16th, 2023)

Mortgage interest rates forecast for next week

With luck, mortgage rates might be due a quiet seven days. However, much depends on markets' reactions to Fed comments.

How your mortgage interest rate is determined

Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.

And that's highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy's in trouble. But inflation rates can undermine those tendencies.

Your part

But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely from lender to lender
2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
5. Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?

Time spent getting these ducks in a row can see you winning lower rates.

Remember, they're not just a mortgage rate

Be sure to count all your forthcoming homeownership costs when you're working out how big a mortgage you can afford. So, focus on your "PITI." That's your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.

Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.

But there are other potential costs. So you'll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There's no landlord to call when things go wrong!

Finally, you'll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan's term, making that higher than your straight mortgage rate.

But you may be able to get help with those closing costs and your down payment, especially if you're a first-time buyer. Read:

Down payment assistance programs in every state for 2021

Tax tips for homeowners 2022: Tax credits and breaks

Homeownership comes with a lot of financial responsibility and a never-ending list of home improvement projects.

But for anyone who pays a mortgage, the good news is that you can deduct several home expenses come tax time — especially if you itemize your taxes — or enjoy other tax breaks as a homeowner.

Here are the top tax tips for homeowners.

1. Mortgage interest deduction

While you can no longer deduct the cost of homeowners insurance premiums, you can write off what you paid toward mortgage interest — if you're eligible and you itemize your deductions.

Start by looking at the date you took out the mortgage and how much you borrowed. If you closed before Dec. 16, 2017, then interest is deductible on up to $1 million in mortgage debt (or up to $500,000 if you're single or married filing separately). The limit falls to $750,000 ($375,000 for single and separate filers) if you bought the home after this date.

2. Home equity loan interest deduction

If you took out a home equity loan or line of credit in 2022, you might be able to deduct the interest paid during the year. But you can only claim this tax break if you 1) itemize your deductions and 2) used the money to buy, build or substantially improve the home.

"Good examples are HVAC (improvements or replacements), remodels, and new roofs," said Dan Herron, a CPA/PFS CFP with Elemental Wealth Advisors. If you're looking to claim the tax break, "do not pay off personal expenditures, like credit card debt," he adds.

If you're eligible, the interest is deductible on up to $750,000 of qualified residence loans ($375,000 for a married taxpayer filing separately), which include your original mortgage plus second mortgages such as home equity loans and home equity lines of credit.

3. Deduction cap for property taxes

The state and local tax (SALT) deduction allows you to deduct up to $10,000 paid toward your state and local governments ($5,000 for married couples filing separately). Taxpayers can deduct property taxes and either 1) state and local income taxes or 2) sales taxes each year. To claim the tax break, you'll need to itemize your deductions.

"Even though you don't think you will benefit from the SALT deduction, still report the related expenditures," Herron said. "You may still have some deductibility on the state return."

4. Tax exclusion for home sale profits

Home prices grew year over year in nearly all metro areas in the third quarter of 2022, making it a good year for home sellers. Even better, those who made a profit on a sale might not have to pay taxes on the earnings. If you lived in your home for at least two out of the five years before selling, then you can exclude up to $500,000 in profits on your income tax return (up to $250,000 if you're single or filing separately).

If you're close to the limit, you can adjust your cost basis by calculating the costs of home improvements. "Keep records of them," Herron advised. "These improvements — think remodels — increase the basis of your home."

5. Other home sale costs

If you do have to pay taxes on some of your home sale profits, expenses used for selling your home — such as legal fees, advertising expenses, and real estate agent commissions — can reduce how much is taxable. These costs are subtracted from your home's sale price, which reduces your capital gains tax.

6. Home office expenses

Whether you're a renter or homeowner, your home office may be tax-deductible — as long as you're self-employed. You don't even have to itemize to deduct expenses like mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.

If you work for someone else as an employee, you can't claim your home office as a deduction. But the home office "could be deductible for state purposes," Herron said. Also, "you could approach your employer and see if they will reimburse you for some of your home-related expenditures."

7. Energy efficiency improvements

The 2022 Inflation Reduction Act "beefed up a lot of credits you could potentially get if you do energy-efficient improvements and/or add solar to the house," Herron said. You can check the federal government's Clean Energy for All website for information and updates. If you plan to make energy-efficient improvements to your home, save your receipts and any documents related to the work so you can claim the credits at tax time. You can claim some of the benefits for tax years 2022, 2023 and beyond:

• For tax year 2022: Homeowners can claim a federal tax credit for 10% of the cost of insulation materials and other energy-efficient improvements, such as energy-saving windows and doors. There's also a $300 credit for purchasing efficient heating and cooling equipment.

For tax year 2023: Households can claim up to 30% of the costs for certain energy-efficiency improvements, up to $1,200 each year, plus a $150 credit for getting a home energy audit. You may also get a tax credit for 30% of the costs of buying and installing a heat pump, up to $2,000. States will also launch rebate programs for energy-efficient heat pumps, electric appliances and home retrofits.

Mortgage and refinance rates today, Jan. 10, 2023

Today's mortgage and refinance rates

Average mortgage rates fell again yesterday, though much more modestly than they did last Friday.

So far this morning, markets are signaling that mortgage rates today might move higher. But the momentum was not strong and could change later in the day.

Find your lowest rate. Start here (Jan 11th, 2023)

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don't change daily to reflect fleeting sentiments in volatile markets.

Keep reading for my main reason for not yet changing my personal rate lock recommendations, which for now remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• LOCK if closing in 45 days
• LOCK if closing in 60 days

Market data affecting today's mortgage rates

Here's a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes inched lower to 3.57% from 3.58%. (Good for mortgage rates.) However, they were rising this morning, which is bad. More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
• Major stock indexes were mostly a little higher soon after opening. (Sometimes bad for mortgage rates.) When investors buy shares, they're often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
• Oil prices fell back to $75.22 from $75.89 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices edged down to $1,879 from $1,882 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy.
• CNN Business Fear & Greed index — inched down to 52 from 53 out of 100. (Good for mortgage rates.) "Greedy" investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while "fearful" investors do the opposite. So lower readings are often better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve's interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that's no longer the case. We still make daily calls. And are usually right. But our record for accuracy won't achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that "intraday swings" (when rates change speed or direction during the day) are a common feature right now.

Find your lowest rate. Start here (Jan 11th, 2023)

Important notes on today's mortgage rates

Here are some things you need to know:

1. Typically, mortgage rates go up when the economy's doing well and down when it's in trouble. But there are exceptions. Read 'How mortgage rates are determined and why you should care'
2. Only "top-tier" borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you'll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Regular readers will know that mortgage rates are largely determined by a type of bond called a mortgage-backed security (MBS). And that those rates often shadow the yield for 10-year Treasury notes.

The reason both those rates and those yields have been falling recently is that investors have suddenly grown enamored of all types of bonds. The extra demand has pushed up prices. But bond yields (and so mortgage rates) always move inversely to prices.

The reason I'm yet to change my rate lock recommendations (above) is that I'm still not convinced investors will keep buying bonds in the volumes they've been doing so far this year. They seem to be doing so because they've persuaded themselves that the Federal Reserve will stop hiking rates sooner than expected.

Yesterday, I quoted The Wall Street Journal's doubts about how realistic that expectation is. And, also yesterday, CNN Business's Before the Bell e-newsletter raised other doubts. Its headline read, "Bonds are back, but for how long?"

The article went on: "Now investors are betting that those rate increases are mostly over and that inflationary pressures are on a downswing. … The problem is that there's no guarantee that interest rates will actually come down, and investors could find themselves blindsided if they don't."

If investors do find themselves blindsided, that could be very bad news indeed for mortgage rates.

And there's plenty of concern among some pretty distinguished people. Last Friday, on Bloomberg TV, former Treasury Secretary Larry Summers predicted "tumult" for bonds through this year.

Of course, nobody knows for sure what will happen in the future to bonds or mortgage rates. But I see too much scope for trouble to urge anything other than caution.

Recent trends

According to Freddie Mac's archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie's Jan. 5 report put that same weekly average at 6.48%, up from the previous week's 6.42%.

In November, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie's and the MBA's forecasts appeared on Dec. 19 and Freddie's on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn't been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

"Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan."

Time to make a move? Let us find the right mortgage for you (Jan 11th, 2023)

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

Those living in Western Michigan know a thing or two about snow accumulation in the wintertime. Winter weather is a normal part of life, and so is shoveling snow. Although residents in the area have lots of experience, many people forget to take the right steps when it comes to snow removal. Putting off snow removal or doing it incorrectly can actually make it more difficult and can even be detrimental to your property.

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