by Jamie Matthews | Published on Sept. 21, 2021
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Mortgage rates are a mixed bag compared with yesterday. Is now the right time to apply for a new mortgage?
Mortgage rates are up for some loan types and down for others today. The 30-year and 15-year fixed both rose a bit, while the 20-year and 5/1 ARM ticked slightly down
If you're thinking about buying a new home, take a closer look at average mortgage rates for Tuesday, Sept. 21 to see how they're trending:
|MORTGAGE TYPE||TODAY'S INTEREST RATE|
|30-year fixed mortgage||3.083%|
|20-year fixed mortgage||2.733%|
|15-year fixed mortgage||2.338%|
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The average 30-year mortgage rate today is 3.083%, up 0.004% from yesterday's average of 3.079%. If you borrowed $100,000 at today's average rate, you'd have a monthly principal and interest payment of $426. Over the life of your loan you'd face total interest costs of $53,413 for each $100,000 borrowed at today's average rate.
The average 20-year mortgage rate today is 2.733%, down 0.032% from Monday's average of 2.765%. At today's average rate, you'd pay $541 per month in principal and interest for each $100,000 borrowed. Meanwhile, the total costs of interest would add up to $29,954 per $100,000 borrowed.
You'll save an astounding $23,459 in interest by choosing the 20-year loan over the 30-year fixed-rate mortgage today. The tradeoff is that you'll need to be able to pay $115 more per month in order to pay your loan off 10 years sooner.
The average 15-year mortgage rate today is 2.338%, up 0.003% from yesterday's average of 2.335%. For each $100,000 borrowed at today's average rate, your total monthly principal and interest payment would be $659. Your interest costs would total $18,671 per $100,000 in mortgage debt over the life of the loan.
Shaving five more years off your loan time would save you another $11,283 in interest compared to the 20-year loan. However, you'll have to be willing to pay an extra $118 a month in principal and interest to be free of your loan another five years sooner. Choosing a 15-year fixed-rate mortgage saves you significantly in interest, so if the monthly payments fit comfortably in your budget, it could be a smart choice.
The average 5/1 ARM rate is 3.141%, down 0.048% from yesterday's average of 3.189%. ARM stands for adjustable-rate mortgage. That means after your initial period expires (in this case, five years), your rate can begin adjusting annually with a financial index. Because rates are still so low right now, historically speaking, there's a very good chance your rate will rise. A higher rate will equate to higher monthly payments and total loan costs, so make sure you're aware of the risks.
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 still pretty 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:
It's always a good idea to compare rates from a few of the best mortgage lenders before locking in. Offers vary significantly by lender, so look closely at the details, including closing costs, to ensure you come away with the best 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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