What Interest Rate Can I Really Expect on a Home Loan?

For 15 years, In&Out Magazine has been the definitive source of “Everything that’s going on” in and out of the community. We thank you, our readers, as well as the businesses that support the magazine through advertising, for that opportunity. But with little going on, and many businesses suspending or canceling their ads during the Covid-19 crisis, we are suspending publication of the magazine and web sites for the month of May. 


Advertised mortgage rates often sound very attractive. Sometimes they sound too good to be true. For many people, they are. The annual percentage rate (APR) you will be quoted for a 30-year fixed-rate mortgage by a bank or other lending institution will depend on several factors, including your income, the amount of the loan compared to the value of the home, and your credit score (see 7 factors below).

To give an idea of what kind of rate you can really expect, Lending Tree compared the actual average mortgage rates (APR) to borrower’s credit scores.

While the best borrowers—those who ticked off all the check boxes glowingly—had an average APR of 3.80 percent in December 2017, the average among those with very good credit scores—760 or higher—was 4.26 percent. That means even people with high credit scores don’t always get the best possible rates, due to the other factors.

mortgage rate apr by credit score
The average 30-year mortgage rates (Purchase APR, expressed as a percentage on the left scale) charged compared to credit score range (shown in the key under the chart). Credit: Lending Tree

These difference matter, of course. Those with credit scores of 680-719 got an average loan rate of 4.56 percent in December 2017, which over 30 years on a $233,586 loan (the average amount in the U.S.) would mean an additional $15,000 in costs compared those with credit scores of 760 or higher, Lending Tree calculates.

Those with credit scores below 640 saw an average rate of 5.01 percent.

Again, keep in mind this graph shows average results. Your mileage may vary, depending on your income or any of the other factors that go into calculating a lender’s risk. And while you may be reading this well after the analysis was done, the concept remains the same.

Factors That Affect Mortgage Rates

In addition to credit score and income, here are important factors that figure in to the rate you’ll be quoted, according to Lending Tree and the Consumer Financial Protection Bureau.

  • The home’s location (including which state it’s in)
  • Loan amount compared to appraised home value
  • Loan type (such as conventional versus FHA or VA)
  • Loan terms (such as 15-year vs. 30 year)
  • Interest rate type (fixed vs. adjustable)

For more information and an online loan calculator, check with the Consumer Financial Protection Bureau, a federal agency.


Help Save Our Community
Small businesses are the lifeblood of our country and even more so this community. Supporting local businesses during this crisis can help keep our community economically viable. Please strongly consider supporting the businesses below, In&Out Magazine's display advertisers, as well as those in the Classifieds section of the magazine (see the full April 9 issue in PDF form). Many of these businesses have been part of the fabric of this community for two decades, not just serving our professional, service and retail needs but stepping up to support local charities, sports teams and so much more. Tip: If you know you’ll need to schedule a service, consider contacting a local business you trust and paying the standard fee for the deferred service. The links below go to their web sites.

Adult & Pediatric Allergy Associates • 602-242-4592
Anthem Senior Living • 602-909-9550
Appliance Pros • 502-501-5501
Business Network of Anthem • 623-455-9630
Carroll Law Firm • 623-551-9366
Century 21 Real Estate - Jeff Huff • 623-223-1221
Creative Home Enhancements • 623-551-5409
Daisy Dream Homes Real Estate • 623-879-3277
Daisy Mountain Dentistry • 623-551-5250
Desert Foothills Air Conditioning • 480-595-0938
Edward Jones • 623-551-0523
Element Dental Centers • 623-551-5555
Hand & Stone Massage • 623-551-6602
Kendallwood Design • 602-252-3844
Kodiak Roofing • 602-501-7717
Luv My PC • 480-703-6609
Merrill Gardens • 623-201-4881
North Valley Water Solutions • 623-551-0515
Preferred Business of Anthem • 623-551-0523 
Prickett Realty • 623-551-8111
ProSkill Services • 623-551-7473
RE/MAX Professionals - Mike Higgins • 623-640-7502
Rise Above Remodeling • 623-551-2013
Soft Water Plus • 623-551-7383
SonoranScapes Landscaping • 602-842-9948
State Farm Insurance - Justin Simons • 623-551-3700
Storage at Anthem • 623-226-8634
Sunset Cabinets • 623-687-6579
Thompson & McGinnis Attorneys at Law • 602-952-2666
Titan Tree Care • 623-444-8448
Titan Pest Control • 623-879-8700
Wyman Plumbing & Mechanical • 623-551-6688

For more local businesses, see In&Out Magazine Classifed Ads >>>  
 
Robert Roy Britt
NoPho resident Robert Roy Britt has written for In&Out publications since its inception in 2005. Britt began his journalism career in New Jersey newspapers in the early 1990s. He later became a science writer and was editor-in-chief of the online media sites Space.com and Live Science. He has written four novels. Email the author.
Robert Roy Britt on Email

Robert Roy Britt

NoPho resident Robert Roy Britt has written for In&Out publications since its inception in 2005. Britt began his journalism career in New Jersey newspapers in the early 1990s. He later became a science writer and was editor-in-chief of the online media sites Space.com and Live Science. He has written four novels. Email the author.

npneditor has 531 posts and counting.See all posts by npneditor