Mortgage and Refinance Rates in District of Columbia

Today's Rates in District of Columbia

The real estate market in and around our nation's capital is highly diverse and competitive. So is the market for home loans. Looking to buy a home? Refinance? Borrow money through a home equity loan? You've got lots of options, not only among Washington, D.C. mortgage brokers and lenders, but in the type of loan you choose and how you set it up.

Choosing the right home loan and lender may seem daunting at first, but it's really just a matter of getting to know your options. Different types of loans work better for different borrowers and situations. The loan and lender that's best for you will depend on factors such as how much you need to borrow, the type of property involved, your credit score and more.

Here's some tips to help you sort through the clutter and find the best mortgage rate and terms in Washington, D.C.

Shop around

Shopping around for a mortgage is essential – don't just assume your regular bank is the best place to go. It's amazing how many people give serious consideration to only one mortgage lender – about half of all borrowers, according to the Consumer Financial Protection Bureau. And that can cost you money.

A difference of even a small fraction of a percentage point in your mortgage rate can add up to tens of thousands of dollars over the duration of a home loan, especially in a market like Washington, D.C. So it's important to check out multiple lenders to find the best rates and terms.

Don't just check the listed rates various lenders and brokers are offering. Those are priced for specific types of borrowers getting a specific type of loan, for which you may not be a match. Instead, you want to request personalized rate quotes from various lenders for the rate they'll offer you for the loan you're seeking.

You can contact individual Washington D.C. mortgage brokers and lenders to request rate quotes directly. You can also use a rate request form such as the one at the top of this page to request personalized quotes from multiple lenders with one query. At any rate, you want to get quotes from at least three lenders and preferably more, so that you have a good idea of what's out there and what your best rate is.

Look beyond the rate

One mistake a lot of borrowers make when shopping for home loans is that they just look at the mortgage rate. That's only part of the picture. Fees can be a big part of the cost as well – closing costs can amount to 2-6 percent of the loan amount. So you need to think about both rates and fees.

A handy way to do this is to simply check the ARM, or annual percentage rate, of each loan. By law, it has to be listed with any advertisement or offer of an interest rate on a loan. The APR reflects the total annual cost of a loan, both the mortgage rate and fees, in terms of an interest rate, so you get a better idea of the full cost of a loan.

Even better, use a mortgage calculator to work out the total cost of different mortgage offers over the duration of the loans. Different mortgage calculators can be used to help figure out your budget and what you can afford in a home loan; calculate how much interest you can save and how much faster you can pay off your loan by increasing your monthly payments; how much you can save by refinancing and more. You can access a wide assortment of these by following the link at the bottom of the page.

What affects your rate?

As noted above, the rate you get is affected by a variety of factors related to you as a borrower and the loan you're seeking. The current Washington, D.C. mortgage rates listed at the top of the page are a reflection of where the market is at, but those are averages and won't necessarily be the rate you qualify for.

The rate you get may be affected by some or all of the following:

• Credit score: The best mortgage rates in Washington, D.C. and elsewhere typically go to borrowers with excellent credit, usually defined as a FICO credit score of 740 and above. Rates generally inch up with declining scores, then start to increase sharply as borrowers' scores approach 600 and below. This varies among loan types and lenders, however; for example, FHA loans may have better rates for borrowers with lower scores than conventional loans do.
• Down payment: Your down payment also affects the rate you can get, with the best rates going to borrowers who can put down 20-30 percent or more. (When refinancing, home equity replaces the down payment). Putting at least 20 percent down also allows you to avoid charges for mortgage insurance, which can be an extra bite out of your monthly budget.
• Loan amount: Higher value mortgages that exceed the lending limits for conventional (conforming) mortgages, known as jumbo loans, typically carry a higher mortgage rate. Fortunately, the Washington, D.C. market qualifies for the highest lending limits allowed by Fannie Mae and Freddie Mac, so that most homes are still eligible for lower conforming mortgage rates.
• Loan type: Rate structures vary among different types of loans. Rates on conforming mortgages are closely ties to a borrower's credit score and down payment. FHA mortgage rates often give a better deal to borrowers with lower scores. Second mortgages, like home equity loans, have higher rates than primary loans used to buy or refinance a home. Adjustable rates start out lower than fixed rates, but may vary over time. And so forth.
• Length: Shorter loans have lower rates than mortgage with longer terms do. Rates on a 15-year mortgage may be half a percentage point or more lower than a 30-year loan. That's one of the reasons 15-year mortgages are a popular refinance option for borrowers who've had their home for awhile and want to knock a few years off their mortgage.
• Property type: Single-family homes qualify for the lowest rates. Mortgage rates on condos run somewhat higher, as do rates for multifamily properties. Be aware that on a condo you will also have regular charges for association fees added onto your loan payments.
• Fees and closing costs: Each mortgage lender structures their loans differently, charging different fees for the various services involved in making a loan. Some lenders charge higher fees and lower rates, or vice versa.
• Discount points: These are a special type of fee that merit paying extra attention to. Discount points allow you to buy a lower rate by paying an additional fee. Each point costs one percent of the loan amount and reduces your rate by a fraction of a percentage point. Buying points can save you money over time if you don't sell or refinance within a few years, but can also be used to produce an unusually low rate for advertising purposes.