by Maurie Backman | March 2, 2021
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Mortgage rates are higher today. Should you apply for a home loan?
Today's mortgage rates are mostly up once again. This is what they look like:
|Mortgage Type||Today's Interest Rate|
|30-year fixed mortgage||3.150%|
|20-year fixed mortgage||2.818%|
|15-year fixed mortgage||2.472%|
The average 30-year mortgage rate today is 3.150%, up 0.022% from yesterday. At today's rate, you'll pay principal and interest of $429.41 for every $100,000 you borrow. That doesn't include added expenses like property taxes and homeowners insurance premiums.
The average 20-year mortgage rate today is 2.818%, up 0.001% from yesterday. At today's rate, you'll pay principal and interest of $545.63 for every $100,000 you borrow. Though your monthly payment will go up by $116.22 with a 20-year, $100,000 loan versus a 30-year loan of the same amount, you'll save $23,636.37 in interest over the course of your repayment period for every $100,000 you borrow.
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The average 15-year mortgage rate today is 2.472%, up 0.021% from yesterday. At today's rate, you'll pay principal and interest of $665.47 for every $100,000 you borrow. Compared to the 30-year loan, your monthly payment will be $236.06 higher per $100,000 in mortgage principal. Your interest savings, however, will amount to $34,802.53 over the life of your repayment period per $100,000 of mortgage debt.
The average 5/1 ARM rate is 3.018%, down 0.335% from yesterday. With a 5/1 ARM, you lock in your initial interest rate for five years, but from there, your rate can adjust once a year, either upward or downward. When you can lock in a 5/1 ARM at a lower interest rate than a fixed loan, it can make sense despite the risk of a rising rate. And today, the 5/1 ARM is cheaper than the 30-year fixed loan. However, given that today's mortgage rates are still fairly low, if you get a 5/1 ARM, there's a good chance your rate will, indeed, increase as time goes by. If you can swing a higher monthly payment, you may want to consider a 20- or 15-year fixed loan instead.
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 pretty low on a historic basis despite a recent climb. 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 very competitive, we don't know if rates will go up or down over the next few months. As such, it pays to:
Whether you decide to get a 30-year loan or a mortgage with a shorter term, make a point to contact different lenders so you can compare the rates and closing costs they come back to you with. Each lender sets its own requirements when it comes to factors like credit score and debt-to-income ratio, so it pays to shop around to increase your chances of walking away with a great deal.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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