Current Mortgage Rates -- January 28, 2021: Rates Come Down Again
Mortgage rates are mostly down today. Should you apply for a home loan?
Mortgage rates have mostly dropped from yesterday. This is what they look like now:
|Mortgage Type||Today's Interest Rate|
|30-year fixed mortgage||2.808%|
|20-year fixed mortgage||2.612%|
|15-year fixed mortgage||2.247%|
30-year mortgage rates
The average 30-year mortgage rate today is 2.808%, down 0.011% from yesterday. At today's rate, you'll pay principal and interest of $411.32 for every $100,000 you borrow. That doesn't include added expenses like property taxes and homeowners insurance premiums.
20-year mortgage rates
The average 20-year mortgage rate today is 2.612%, down 0.042% from yesterday. At today's rate, you'll pay principal and interest of $535.57 for every $100,000 you borrow. Though your monthly payment will go up by $124.25 with a 20-year, $100,000 loan versus a 30-year loan of the same amount, you'll save $19,537.73 in interest over the course of your repayment period for every $100,000 you borrow.
15-year mortgage rates
The average 15-year mortgage rate today is 2.247%, down 0.025% from yesterday. At today's rate, you'll pay principal and interest of $654.81 for every $100,000 you borrow. Compared to the 30-year loan, your monthly payment will be $243.49 higher per $100,000 in mortgage principal. Your interest savings, however, will amount to $30,210.32 over the life of your repayment period per $100,000 of mortgage debt.
The average 5/1 ARM rate is 3.186%, up 0.029% from yesterday. Right now, you'll pay a higher interest rate on a 5/1 ARM than you will for a 30-year fixed loan, and as such, the ARM makes little sense -- especially since your rate has the potential to rise after five years. Granted, your rate could also start to go down at that point, but since there's no upfront interest rate discount, you're better off with a fixed loan today.
Should I lock in my mortgage rate now?
A mortgage rate lock guarantees you a specific interest rate for a certain 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 if rates climb between now and when you close on your home loan.
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 still extremely low. 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 loan if rates fall before you close on your mortgage, and while today's rates are quite competitive, 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
If you're ready to apply for a mortgage, reach out to different lenders and see what offers they come back with. You're going to want to look at a few key things -- the interest rate each lender is willing to give you on a home loan, the closing costs each lender wants to charge, and whether or not you'll need to pay points to buy down your rate to the point where it's competitive. Be sure to look at the big picture when assessing those offers so you make the best decision.
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