May mortgage rates at all-time low

We've never seen mortgage rates this low in May.

The average cost of a 30-year, fixed-rate mortgage -- the most popular type of home loan – is just 4.88% so far this month.

That's less than the monthly average for every May since 1986 when's print predecessors began keeping such records.

Miami and Atlanta have the cheapest home loans of the 13 cities we track, with an average rate of 4.71%. Los Angeles and San Francisco have the highest average rate, but it's just 5.00%.

You can see how this has affected mortgage rates in your area by searching our extensive database of home loans.

Lenders are offering 30-year fixed-rate loans with no points, and application fees of less than $2,000 in most markets.

The principal and interest payments would be just under $500 a month for every $100,000 borrowed.

Qualify for and you'll never have to refinance or worry about your home loan again.

They're safe, totally predictable loans that carry none of the risks associated with interest-only or adjustable-rate mortgages.

May mortgage rates have never been this low, averaging well below 5% for a 30-year, fixed-rate home loan.

You won't have to worry about your interest rate going up, principal payments kicking in, or any other nasty surprises that could drive up your housing costs a few years down the road.

Our mortgage calculator can show you the payment for any fixed-rate loan.

It will also provide a month-by-month amortization schedule that shows how much you've reduced your debt and how much you still owe if you want to pay your loan off.

Interest rates are at record lows right now because the Federal Reserve has spent the past several years doing everything it can to drive them down.

Last November, for example, the government-owned bank announced that it would purchase another $600 billion in long-term Treasury bills between then and the end of June.

Mortgage rates and monthly payments are down in every major city we follow when compared with 1996.

Flooding the bond markets with all that money pretty much guaranteed that all long-term interest rates would remain incredibly cheap throughout the winter and spring.

And they have.

Imagine the difference between what borrowers are paying now and what they paid 25 years ago this spring, when the average 30-year, fixed-rate home loan cost a whopping 10.26%.

(That is not a typo.)

The average monthly payment on such a back in May 1986 was nearly $900 for every $100,000 borrowed, or about $400 more than at today's average rate.

Fifteen years ago in 1996 the average interest rate was still above 8% and the monthly payment worked out to $737, or about $230 more than you'd pay on a similar home loan right now.

The steady decline in the cost of home loans has made it possible for buyers to afford to borrow more – and pay more for a home.

But you've got to be careful.

You shouldn't borrow so much that you're scraping and scrimping to pay your bills every month no matter how low interest rates might be. Nor should you devote every cent of your savings to a down payment.

Our 4 simple rules for financing a home can help you decide the maximum amount you should spend on a home.

One final word of advice.

If you have below average credit, or a limited amount of money for a down payment, you should probably pursue an FHA loan or VA loan.

You can increase the odds of having your application approved by getting the government to guarantee your home loan's repayment.

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