Mortgage rates have more than doubled. Here’s what can determine the rate you’ll get.

Mortgage rates show no signs of dropping back to the historic lows seen early in the pandemic.

The average interest rate for the most popular long-term mortgage — 30-year fixed — is more than double what it was a year ago, according to government-backed mortgage buyer Freddie Mac. The rate was 6.49% as of Dec. 1, up from 3.1% last year.

Because of higher rates coupled with high home prices, the median monthly mortgage payment nationwide rose to $2,012 in October — a new high, according to the Mortgage Bankers Association. Households in the Philadelphia area needed to make almost $20,000 more annually to afford the median-priced home in October than they did last year, according to Redfin.

Because homeowners locked into lower mortgage rates are staying put, the number of homes newly listed for sale is down.

Home seekers compare current rates with last year’s, and “they think, ‘Wow, I’ve missed the boat,’” said Angela Barnshaw, chief executive officer and broker of record at Agent06, a Haddonfield-based concierge real estate agency. “That is the same thing we hear over and over.”

Despite higher rates, home buyers still want or need to purchase, and they have options.

“Don’t let the interest rates scare you from getting your dream home,” said Saunda Love, senior sales manager at Allied Mortgage Group, based in Bala Cynwyd.

Buyers often ask lenders, “What interest rate can you get me?” But a more important question is “What are the different programs that might fit my profile?” said Julius S. Sharpe Jr., a Philadelphia-based senior CRA (Community Reinvestment Act) mortgage loan officer at Fulton Mortgage Co.

“You may call for the rate, and I could match the rate Joe Smith gave you, but have you looked at this program?” he said.

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A buyer may be attracted to a low rate but not realize that rate comes with high upfront fees added to the closing costs. And buyers tend to equate lower rates with lower payments, but “depending on how a mortgage program is structured, you could have a program with a higher rate, but your monthly payment is lower,” Sharpe said.

Interest rates also are hard to predict and have been volatile. When average 30-year fixed mortgage rates were about 3.2% in early 2022, no one predicted that they would jump to about 7% this year.

Homeowners can pay to refinance mortgages later if interest rates drop.

The mortgage rates and programs buyers can qualify for depend on the strength of their financials. Lenders try to predict whether a homeowner is likely to be able to pay back the loan by examining a buyer’s credit, income, savings, and debt.

“They have to assess the risk associated with giving you any amount of money,” said Kamille Lawson, a Chester County-based loan officer at Primary Residential Mortgage Inc. “The amount of risk differs based on your financial information.”

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If a home buyer has a high income, high credit score, and consistent job history, with not much debt and lots of money saved, “you look very attractive,” she said. If a buyer falls below or barely meets minimum financial requirements, “you look very risky,” she said.

“A lot of times folks might be thinking, ‘Hey, I’m being picked on,’ or ‘Hey, they don’t want to give me anything,’” Lawson said. “Don’t think that way.”

Buyers can talk to lenders, financial advisers, and housing counselors about how to improve their financial profile.

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“They might have something that’s stopping them from getting that prime rate,” said Love at Allied Mortgage Group. “They might just have to pay something off to be able to qualify to get a better interest rate.”

Buyers could end up saving money by paying off debts and getting a lower rate instead of using that money to boost a down payment, Love said.

Buyers with credit scores of 700 or higher have more choices and can access better rates, but programs are available for buyers with lower credit scores. The Federal Housing Administration and the U.S. Department of Veterans Affairs “both have great programs” for people with credit scores in the 500s with interest rates that are still reasonable, said Dana Gounaris, vice president and producing branch manager at the Haddonfield office of NFM Lending.

“There really are a lot of loan programs for all types of financial situations,” he said.

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Good lenders examine buyers’ unique circumstances to find the best loans for their clients. For example, certain mortgage programs are available exclusively to veterans, physicians, or teachers.

Other loans might make sense if a buyer plans to move in a few years. Two people with the same income may qualify for different programs at different rates because they have different expenses or savings.

“Make sure you’re giving your loan officer all the information they’re going to need to make sure they’re getting you approved for what you can really qualify for,” Love said.

Once buyers choose a loan, they also can make choices that affect their mortgage rate. For example, they can pay points to lower their rate. Each point is 1% of the loan amount.

Different lenders offer different types of loans, which come with different interest rates and terms, so buyers should talk to more than one lender. Lenders assess buyers’ entire financial situation, determine whether and how clients can improve their profile, and figure out which programs benefit them most.

“It’s amazing what a great lender can do,” said real estate broker Barnshaw. “They’re like a magician.”

Sharpe said a good lender should offer “a menu of different programs” based on a buyer’s qualifications. Lenders recommend that buyers ask for and consider all their options.

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For example, although 30-year fixed-rate mortgages are most popular, adjustable-rate mortgages have grown in popularity as rates have climbed from historic lows early in the pandemic. Homeowners pay an initial interest rate that is typically lower than for a fixed-rate loan. After a certain number of years, the rate periodically adjusts based on economic conditions.

Buydown programs also have become more popular. Sellers contribute money at closing, and buyers pay lower interest rates for the first year or years. For example, if a buyer purchases with a 30-year, 3-2-1 buydown mortgage at a 6.99% rate, the rate the first year would be 3.99%, then 4.99% for the second year, 5.99% for the third, and 6.99% for the remaining years. (3-2-1 refers to the interest rate reduction of 3 percentage points the first year, 2 the second year and 1 the third year.)

These programs can be especially attractive for buyers who will have higher incomes in the next few years.

Higher mortgage rates and slower home sales have led to layoffs in the mortgage industry and lenders competing over a smaller number of home buyers. Nationwide, the number of residential mortgages that were originated in the third quarter of the year was down 47% from a year earlier — the biggest annual drop in 21 years, according to the national real estate tracking firm Attom.

Lenders are trying to attract clients, and some are offering new deals.

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For example, in September, the national lender Rocket Mortgage launched a program that reduces a buyer’s mortgage rate by 1% for the first year of the loan. Through the “Inflation Buster” program, homeowners make reduced monthly payments and Rocket Mortgage covers the difference. Buyers are eligible for the offer if they lock in their rate by the end of the year.

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.