Summer’s best mortgage rates keep getting better

Three green houses on stacks of coins

I’m not sick of writing it yet. I hope you’re not sick of reading it.

Mortgage rates are the lowest we’ve ever seen -- again. The average rate in late June fell to 3.89%, according to our national survey of lenders, a record low.

These low rates mean you could be in a significantly better position to buy or refinance this summer compared to this time last year, when the average loan sold for 4.66%

As for home prices, it depends on where you’re looking.

Some cities, like Phoenix, are seeing asking price increases of as much as 16.5% compared to last year. Others, like Tacoma and Chicago, have seen asking prices fall about 6%, according to Trulia’s Price Monitor data.

Our weekly chart of average mortgage rates shows what you can expect to pay for a typical home loan in 25 major metropolitan areas.

Phoenix offers the cheapest 30-year mortgages on average at 3.67%, based on our late-June survey of lenders, while Tampa is the most expensive, with the average home loan going for 4.50%.

Our chart is a good starting point for tracking down the least expensive home loans in your area.

Search our extensive database to find the best rates from hundreds of lenders.

Then try our mortgage calculator to see what your monthly principal and interest payments would be on any fixed-rate loan.

To get the best possible rate, you need to know how to compare offers from different lenders.

Lenders must disclose the fees you’ll pay using the Department of Housing and Urban Development’s Good Faith Estimate form.

"These rules prohibit lenders from increasing the costs of items they control, such as origination and processing fees, after they have issued the Good Faith Estimate," says Shawn Gilfedder, president and CEO of McGraw-Hill Federal Credit Union in East Windsor, N.J. "Fees for third-party services, such as appraisals and title insurance, can increase no more than 10%."

The GFE isn’t foolproof, though.

"By law, lenders cannot issue a GFE until the borrower has agreed to move forward with an application," says Amy Tierce, regional vice president of Fairway Independent Mortgage Corp. in Needham, Mass. "Many lenders have created a 'pre-GFE' to use when illustrating closing costs. This pre-GFE should match the actual GFE, unless the purchase price or the nature of the property or loan amount has changed."

Establish yourself as an assertive customer from the start, and you may stave off a bait-and-switch.

"Tell the loan officer that if the fees do not match the GFE when you see it, you will cancel the transaction," Tierce says.

Still, unscrupulous lenders may have a few other tricks up their sleeves.

"Consumers are told to compare APR rates, but those calculations can vary, and APR can be manipulated," Tierce says. “I suggest that the consumer get a rate quote and a breakdown of closing costs in writing, and compare apples to apples, same-day price quotes, since rates can change daily and sometime during the day."

Tierce says consumers should ignore prepaid interest and tax and insurance escrows on their GFEs. Lenders don’t control these costs but will often quote them favorably to make a comparison look better.

Too-low interest rates are another red flag.

"Consumers can spot a quote that’s too good to be true by first checking what the mortgage lender is offering in terms of interest rate and then quickly researching online the current 30- or 15-year fixed mortgage rates in the market," says Xavier Epps, financial adviser and founder of XNE Financial Advising in Woodbridge, Va. "It's very rare that a consumer will receive rates lower than what they are currently trading at or near in the market."

Consumers who are offered a very low rate should look closely at the loan’s fees. Predatory lenders will overcharge you elsewhere or put you into a loan you didn’t want, Epps says.

We generally recommend looking for a loan with lender fees of $2,000 or less.

Rates and fees are important, but you should compare loan officers, too.

"Work with someone who demonstrates competence, not just the person who presents the lowest rates and fees," Tierce says. "How quickly did they respond to you? How thoroughly did they answer your questions? Were they willing to present options in writing and present multiple options and scenarios to meet your needs?"

A simple Internet search can sometimes provide clues about a lender’s reputation.