Mortgage rates are on the rise. Here are some tips for getting the lowest rate.

Mortgage rates have increased recently. According to Freddie Mac's latest data, the 30-year fixed-rate average, the most popular mortgage product on the market, is close to 5%. The last time the 30-year threshold was so high was 2011.

According to the indications, they will continue to progress, leaving many homeowners and buyers to question the meaning of the rates on the rise. I've met Craig Strent, CEO of Apex Home Loans, based in Rockville, to ask him for practical advice for anyone considering buying a house or refinancing a mortgage. Our conversation has been changed for clarity and length.

Q: Mortgage rates are higher than they have been in seven years. Have I missed my chance of getting a low rate?

Strent: No, rates are no longer at historical low, but they are still historically low. And if you've been home for a while, you may still be paying too much. When people talk about rates without a quote, they refer to the 30-year fixed rate, which is basically the most expensive mortgage you can get. You may not need a fixed period of 30 years.

[Mortgage rates soar to seven-year highs]

Rates in general are up, but maybe your rates would not be. For example, you may have bought your first home five or six years ago and your family is currently expanding and you plan to move in the next three to five years. Maybe it's time to step out of this 30-year period and move on to something like a 5/1 [adjustable rate mortgage].

People are talking about this word "rate". But rate usually means the fixed period of 30 years. Historically, the fixed term over 30 years was 7, 8, 9% depending on the year. Remember that 6% was a gift in 2006, 7% was great in the 90s and 9% was incredibly good in the 80's. Do not forget 5 [percent] is not 5 [percent]. The rate is not the rate because you deduct interest. So the real cost is lower.

Q: Why are mortgage rates going up?

Strent: I am not an economist, but the recent increase in rates is mainly due to the low unemployment rate, which reflects a strong labor market that reflects a strong economy. A strong economy usually results in higher rates. What I often say to people is mortgage rates as small doses of bad economic news. When we receive small amounts of bad economic news, the rates go down. When the economy is in full swing, the money often comes from bonds and turns into equities and rates move in the opposite direction. Last week was a bit complicated because of the jobs report, the lowest unemployment rate in 49 years, and the rates really rebounded. It does not always move at the same pace, but in general, a strong economy means that rates will rise.

Q: This is an unfair question because I ask you to examine a crystal ball and tell me how much the rates will go up.

Strent: If I knew it. . . The last time we saw short-term rates rise in a few years, long-term rates [mortgage rates] in fact remained stable. The truth is that I will not even try to say how they will take it other than to say macro-economically because the economy is going better, rates tend to rise.

Q: All these people stayed away trying to time their refinancing. Did they miss their chance?

Strent: Then agree. . .

Q: You may have already answered this question in your first answer.

Strent: I did it. I do not think you missed your chance to refinance. If you've been home for a while and have not refinanced yet, you could probably still save money by doing it, depending on your plans for the house.

Q: How can I get the best interest rate for my mortgage?

Strent: The first thing I would say to people, is that we make our mortgage payments in dollars and not in rates. The question you want to ask yourself is: how can I get the lowest cost for the time I'm going to live at home? Many first-time homebuyers live in the house for five to seven years and take out fixed-rate mortgages with a term of 30 years. So, by definition, they are paying too much because you're taking a 30-year fixed term loan and it's the most expensive mortgage. You pay a premium. If you only use money for five, seven, eight or nine years, you are simply overpaid. You paid 20 years of fixed rate protection that you did not need and nobody likes to pay too much, especially a mortgage.

I would reposition it to indicate the lowest cost compared to the lowest rate, and then align your mortgage not on when you are going to live at home, but when you will need the loan. If you pay [private mortgage insurance] or you will take two loans, you may end up refinancing when you have some appreciation. Match the type of mortgage for the period during which you need it.

You should tell your readers that for the moment, there are many options. There are five, seven, 10 and 15 arms. The 15-year ARM is becoming more and more popular. This is not worth 15 years old. But [an adjustable rate] the mortgage has a rate that can not change for five, seven, 10 or 15 years. Most 30-year fixed rate mortgages do not even reach the fifteenth year. A 15/1 arm, which is a 30-year fixed rate mortgage for the first 15 years, without a balloon but can change after 15 years. These cost on average about a quarter more than those of 30 years old and are worthy of consideration.

Q: Many buyers are afraid of firearms because of the housing crisis. How do weapons today differ from those of the time?

Strent: I like this question. The people who had problems with firearms, for the most part, had weapons of interest only. They paid no capital. They did not have equity. They put zero to very low and then their value at home went the other way. This option does not exist anymore. You can not even have problems this way if you want to. Now, can you get into trouble with one arm? Of course, you could. But as a general rule, people who can get the best types of arms usually have some fairness at home. Now, the only thing that can be dangerous with one arm is the rate of adjustment of the payment rate that you can not afford. But that should be debatable. Because if you said that I would live in this house for seven years and that I would move, I would tell you to get a 7/1 arm or even a 10/1 arm. The rate must be fixed for the entire period in which you reside there and you must be done with the mortgage before you even make the adjustment. If you're worried about your arms, go for an arm whose rate is set for a longer period than you think you can live at home.

Q: Do I have to have a very good credit score to get a good rate?

Strent: It's one of the biggest myths. You do not need a high score to qualify for a mortgage these days. But the higher the score, the better the rate.

If I can get away a bit, one of the things I wanted to address is, in my opinion, the biggest myth that currently exists, that you need a large down payment. Well, that's just not true. D.C. Open Doors is a zero program. You have FHA at 3½ percent, and Fannie Mae and conventional Freddie Mac are at 3 percent now. VA is zero down. There are so many programs that require very little money and many of them can be made with a damaged credit.

[More veterans and military members are putting VA loans into service to buy homes]

Q: How many new buyers have they dropped by 20%?

Strent: It is rare. It is rather between 3 and 10 [percent] down. And what people also need to know, is that the PMI, private mortgage insurance, has become much more affordable in recent years. [If you put] less than 20% down, you have to deal with [PMI] In a certain way, this means that you have to take two mortgages, pay a higher rate or pay a PMI. But what I would say to your readers is that the monthly PMI carrying cost has decreased. If you buy with less than 20% off, from a financial point of view, it's not as expensive as before. There are many creative ways to pay the PMI these days. Previously, you only paid monthly. Now you can opt for a higher rate. You can finance it in addition to the loan. You can buy it in a lump sum. You can share the bonus. You could pay a portion of it in advance and in a reduced monthly amount. They became very creative with PMI.

Credit guidelines have eased to allow people to return home for the first time with a smaller down payment, and slightly more flexible credit guidelines currently exist. Where there is not much change and where it is still quite tight – and it should be – is the debt-to-income ratio, which I would translate as your ability to refund. So, if you do not deposit a lot and your credit is good but not excellent and you can demonstrate your ability to repay, you can get a loan.

Q: Will rising mortgage rates help lower house prices?

Strent: So, there are two parts to that. In the short term, this could even push them up, as people who are waiting to buy or shop for a while may feel some pressure to get a share before rates rise further. And then you have an influx of bids that could, in the short term, drive up values, particularly in the fourth quarter, where there are fewer stocks, which could exacerbate them further.

In the longer term, I do not think that the pressures on the reduction of housing prices will be very heavy, because stocks in general are already insufficient in our region. So, I do not really think it's going to have a lot of impact.

Rates are only a factor in the purchase decision. Buy because the rates are here or that there is no right [decision] if your plans are longer term, it means that you will live there for at least five years or more. The right way to make a purchase decision is to do a detailed rent analysis against your budget and see what is the cost of renting for you over time compared to the cost of home ownership . All your readers who are thinking of buying should have an analysis of the rent in relation to their own, their income, their tax bracket, their plan, because there is no global answer for everyone.

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