What every homebuyer should know about mortgage rates in 2015

Get in while the gettin's good.

That's one way to sum up what homebuyers should know about mortgage rates in 2015.

Of course, there's a little more to it than that, so if you're looking to get the best possible rate in 2015, you should be aware of where mortgages stand and where experts think they're going.

What's happening now

The good news is that rates are still attractive right now. In January 2014, the average commitment rate on a 30-year, fixed-rate mortgage was 4.43 percent, according to Freddie Mac. That's up from the previous year, but still lower than the annual average of every year from 2011 back to 1971. (Freddie Mac was chartered by Congress in 1970.)

Rates for 30-year fixed mortgages stayed above 4 percent throughout most of 2014, mostly due to a continuing optimistic outlook about the economy. So what does that have to do with mortgage rates? Confident investors don't buy safe investments like mortgage notes -- they bet on riskier (and more profitable) investments. That usually means that mortgage rates will go up.

But in October and November, they fell as low as 3.92 percent. Some experts speculate that was due to global uncertainty during those months, which may have encouraged investors to purchase long-term mortgage bonds to protect their assets.

The bad news? Rates are expected to rise in 2015 as the economy continues to stabilize and the Fed continues to scale back on its stimulus program.

Predictions for 2015

Mortgage rates were expected to “…increase above 5 percent in 2014 and then increase further to 5.5 percent by the end of 2015," according to Jay Brinkmann, MBA's Chief Economist and Senior Vice President for Research and Education, but that didn’t materialize. Their forecast as of November 2014 for 2015 is for 30-year fixed rates to hit 5.1 percent by Q4 of 2015.

What this means for homebuyers

Increasing rates is no reason to lose your head, so don't let it influence your buying decision. If you want to feel better about a 5 percent mortgage rate, just compare it to the average annual rate in 1981: a whopping 16.63 percent, according to Freddie Mac.

But if you're currently in the market for a home, there are a few things you should do to get the best loan.

First, decide which type of loan works for you. Is a 30-year, fixed rate the way to go? Would a 15-year note make more sense? "You have to decide up front, at the very beginning, which loan program works best for you," writes David Reed President of CD Reed, Mortgage Bankers. "When loan officers can't compete on a particular loan program or they find they can make more money on another loan, they'll try to steer you away from your selected loan program. [But] you can't compare one loan against an entirely different loan when you're looking for the best rate. It is imperative that you truly compare apples and apples."

Second, shop around for the best mortgage. But be sure to look beyond the mortgage rate when comparing different lenders' programs. The lowest interest rate isn't always the best deal, so you have to read the fine print to understand the true cost of the loan. "What good is 6 percent compared to 6.125 percent if the lower rate costs you several thousand dollars?" asks Reed. "Not much."

Finally, once you sign a contract on a house, lock in the rate as soon as you're comfortable with it. Don't wait to see if rates will drop, because there's a good chance that they'll go the other way.

Photo credit to Kevin Irby