They're up. They're down. They're back up again.

It's been a volatile year for mortgage rates, and we experienced another upward spike in June.

The average cost of the most popular type of home loan -- the 30-year, fixed-rate mortgage -- fell a little to 6.53% in our most recent weekly survey of major lenders.

But that's still a point more than in January, when mortgage rates bottomed out at 5.57%, and the highest they've been since last summer's peak of 6.82%.

For much of this year, borrowers with good credit had little trouble finding prospects in our extensive database of mortgage lenders offering loans for 6% or less.

That's not the case right now.

Indeed, for the first time in a couple of years, adjustable-rate mortgages are considerably cheaper than fixed-rate loans, making them an attractive alternative.

The average cost of 5/1 ARM -- a relatively safe, traditional type of adjustable-rate loan where you pay the introductory rate for the first five years and then the rate resets once a year after that -- is also up, but lower, at 6.09%.

Lenders offering the best deals on fixed-rate loans, about 6.25% right now, are charging as little as 5.5% for a 5/1 ARM. Anytime you can save a half-point or more, an ARM could make sense for you.

Unfortunately, there are two things that haven't changed over the past year. If you:

• Have bad credit, you're in big trouble. It's difficult, if not impossible, to get a loan if your credit score is below 620. You'll pay a penalty in the form of higher mortgage rates if your score is between 620 and 720.
• Need to borrow a lot of money -- anywhere from $417,000 to $729,500, depending on the location -- a jumbo loan will be very expensive. Expect to pay well above 7%.

Here's a closer look at what's going on with all the major types of home loans:

FIXED-RATE MORTGAGES

What's behind the sudden surge in mortgage rates? The even bigger surge in everything from wheat to oil prices.

Investors who buy long-term debt like mortgages fear inflation more than anything else, because it eats away at their profits. As a result, they're demanding high interest rates.

That's why our most recent survey of major lenders, taken July 2, showed the average cost of a 30-year, fixed-rate mortgage is a half-point higher than it was just six weeks earlier.

For every $100,000 you borrow, you'll pay $30 a month more for the average loan today than you would have for that loan in May, and $60 a month more than you would have paid for it in January.

Our mortgage calculator can tell you what the payments would be for any loan at any interest rate.

Taking a longer view, home loans remain surprisingly affordable.

Mortgages aren't as cheap as five summers ago, when 30-year rates bottomed out at 5.28% -- the lowest they've been since Interest.com (and its print predecessors) began its weekly survey of major lenders in 1985.

But today's mortgage rates are lower than the 7% or 8% we were paying during the mid-to-late 1990s and the double-digit rates we were charged throughout the 1980s and early '90s.

Look at it this way: Anytime you can finance a home for less than 6.5%, you've struck a good deal.

SUBPRIME MORTGAGES

A couple of years ago, subprime loans accounted for more than 20% of all new mortgages. Now they account for about 3%.

In many ways, that's a good thing.

The deceptive, costly, adjustable-rate loans created especially for subprime borrowers, such as option ARMs and 2/28 and 3/27 mortgages, have virtually disappeared.

Although they were easy to get, they were horrible loans. Hundreds of thousands of borrowers are defaulting because of the onerous terms and rapidly rising payments.

The record number of foreclosures caused by those loans is driving the current mortgage crisis and pushing the economy toward recession.

More than 1.5 million homeowners lost their properties to foreclosure last year -- more than twice the historical average -- and that figure may exceed 2 million in 2008.

If your credit score is above 700, you're good to go. If it's below 640, you'll have a tough time getting approved for any type of mortgage.

Your best -- indeed, almost only -- bet is to qualify for a federally backed loan program.

You'll need a credit score of at least 590 or 600 to have a shot, and it still will be a long shot.

JUMBO LOANS

Most loans are now bought, packaged and resold to investors by two government-chartered companies, commonly referred to as Freddie Mac and Fannie Mae.

Investors are more willing to buy the debt packaged and sold by Freddie Mac and Fannie Mae, because those mortgages must meet their standards for creditworthiness, making them less risky than nonconforming loans that don't qualify.

Borrowers who can meet Freddie Mac and Fannie Mae's requirements benefit, too, by paying lower interest rates than they would for nonconforming loans.

One of those rules had made it impossible for Freddie Mac and Fannie Mae to buy loans for more than $417,000.

That's why jumbo loans used to cost about a half-point more than conforming, fixed-rate loans.

But since the mortgage crisis began last year, investors have been even more reluctant to buy loans not backed by Freddie Mac and Fannie Mae.

That's made jumbo loans harder to obtain and more expensive. The average cost was 7.69% in our most recent survey, which means the spread between jumbo and conforming loans has grown to a substantial 1.1 percentage points.

When Congress raised the loan limit in 224 high-cost counties to as much as $729,750, it expected more consumers would be able to qualify for cheaper loans.

At first, only a handful of banks were willing to make those loans, and they charged higher than expected interest rates.

That began to change in early May, so perhaps we'll soon see more of these loans being written.

Find out more in our complete report on jumbo loans.

ADJUSTABLE-RATE MORTGAGES

Subprime mortgages have given all ARMs a bad name.

Lenders have shied away from making them. Borrowers have been scared to even consider them. That's why more than nine out of every 10 mortgages written this spring were fixed-rate loans.

But there's nothing wrong with the consumer-friendly ARMs given to borrowers with good credit.

They're typically tied to a reasonable financial index, with just one reset of no more than 2 percentage points a year and a maximum increase of 6 percentage points over the life of the loan.

Our survey found the average rate for the most popular type of ARM is 6.09%.

But our database of mortgage rates shows lenders offering 5/1 loans for as much as a point less than 30-year, fixed-rate loans.

That's a surprising reversal of what we were seeing this spring.

As recently as March, the average 5/1 ARM actually cost more than the average 30-year, fixed-rate loan, and in April, the two rates were about even.

But now, there's a good reason to consider an ARM. You could save about $60 a month on every $100,000 you borrow versus a 30-year, fixed-rate mortgage.

By Mike Sante

Interest.com Managing Editor

Have a question about your finances? Ask us at editors@interest.com.

Whether you're buying a home or refinancing an existing mortgage, we have a mortgage calculator that can help you make the right decisions.