Current Mortgage Rates -- January 20, 2021: Rates Reverse Upward Trend

On Jan. 20, 2021 mortgage rates went down on all loans. Here's what you need to know about average interest rates today.

On Jan. 20, 2021 mortgage rates fell slightly. Although rates have been going up in recent days, this trend reversed today, with rates falling slightly for all loans. Rates remain near record lows so it's still a great time to secure a home loan.

Here's what you need to know about average rates today.

Data source: The Ascent's national mortgage interest rate tracking.

30-year mortgage rates

The average 30-year mortgage rate today is 2.842%, down 0.019% from yesterday's average of 2.861%. For each $100,000 borrowed at today's average rate, your total monthly principal and interest payment would be $413. Over the life of the loan, your total interest costs would add up to $48,727 per $100,000 borrowed.

20-year mortgage rates

The average 20-year mortgage rate today is 2.599%, down 0.063% from yesterday's average of 2.662%. You'd be looking at a principal and interest payment of $535 per $100,000 borrowed at today's average rate. During your entire loan repayment period, you'd pay total interest costs of $28,337 per $100,000 borrowed.

A 20 year loan comes with 120 fewer payments than a 30-year loan. Because you're making fewer payments, each one must be higher. But your savings on total interest costs is significant since you're paying interest for a decade less time.

15-year mortgage rates

The average 15-year mortgage rate today is 2.262%, down 0.023% from yesterday's average of 2.285%. At today's average rate, you'd pay $656 per month in principal and interest per $100,000 borrowed. Total interest costs would be $18,016 per $100,000 in mortgage debt over the life of the loan.

A 15-year loan cuts the number of payments in half compared with a 30-year mortgage. Obviously, monthly payments must be much higher since you're making so many fewer payments. But total interest costs will be far lower due to the shortened repayment time.

5/1 ARMs

The average 5/1 ARM rate is 3.230%, down 0.143% from yesterday's average of 3.373%. An ARM is a riskier loan option because your interest rate is fixed just for a limited time, after which it can begin adjusting. With a 5/1 ARM, it's fixed for the first five years and can adjust once annually after that.

It can be worth taking the risk of an ARM if you get a lower starting interest rate than with fixed-rate alternatives and you plan to move or refinance before rates go up. It could also make sense if you think rates will fall. But since rates remain very low right now and a 30-year fixed-rate loan has a lower rate than the ARM, it wouldn't make sense to get an adjustable-rate loan now.

Should I lock my mortgage rate now?

A mortgage rate lock guarantees you a certain interest rate for a specified period of time -- usually 30 days, but you may be able to secure your rate for up to 60 days. You'll generally pay a fee to lock in your mortgage rate, but that way, you're protected in case rates climb between now and when you actually close on your mortgage.

If you plan to close on your home within the next 30 days, then it pays to lock in your mortgage rate based on today's rates -- especially since they're so competitive. But if your closing is more than 30 days away, you may want to choose a floating rate lock instead for what will usually be a higher fee, but one that could save you money in the long run. A floating rate lock lets you secure a lower rate on your mortgage if rates fall prior to your closing, and while today's rates are still quite low, we don't know if rates will go up or down over the next few months. As such, it pays to:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

To find out what rates are available to you, compare rates from at least three of the best mortgage lenders before locking in.