Let's start with a story about a customer I recently met in Detroit. This individual had a credit score of 720, prepared a 15% down payment, and applied for a 30-year fixed loan. The interest rate received during the pre-approval stage was almost on par with the market average.

To understand this case, we first need to know how interest rates are determined. The benchmark is the yield on 10-year Treasury bonds. This is combined with the Federal Reserve's benchmark rate, inflation indicators, and the supply and demand in the MBS market. These four factors create the average rates announced weekly.

• 10-year Treasury bond yield
• Federal Reserve benchmark rate decisions
• Inflation indicators
• MBS market supply and demand
• Credit score, DTI, down payment

As of July 2026, the average rate for a 30-year fixed mortgage is in the high 6% range. The 15-year fixed rate is between the high 5% and low 6% range. The difference between the two products is usually 0.6 to 0.8 percentage points. The 15-year loan has higher monthly payments, but the total interest is definitely lower.

Returning to that customer's story, they also compared the 15-year option. When the calculation showed that the monthly payment would increase by over $400, they ultimately chose the 30-year fixed option. Instead, they decided to make additional principal payments each month. This approach can also be a practical alternative.

They also considered an ARM. The 5/1 ARM had a lower initial rate. However, this individual planned to stay in Detroit long-term. Therefore, they opted for a fixed rate to avoid the risk of rate fluctuations.

Credit scores actually make a significant difference. A score above 760 typically results in average or lower rates. A score in the 680s increases rates by 0.2 to 0.5 percentage points. A score below 620 can lead to a difference of more than 1 percentage point.

Housing prices in Detroit are relatively low. Thus, the burden of the down payment is also comparatively small. However, there are many older homes, so insurance premiums and property taxes need to be checked as well. This aspect affects the overall structure of monthly payments.

The advice for Korean households is simple. Keep your credit card utilization low. Avoid applying for new loans or cards right before your application. Prepare income documentation in advance. Just following these three tips can significantly speed up the approval process.

In the future, interest rates may move gradually based on Federal Reserve policies and price indicators. It is advisable to prepare for fluctuations within the current range rather than expecting large changes.