Mortgage Rates for September 14: Rates Stay Low for Another Day

Mortgage rates for Sept. 14, 2020 remain very low. Here's what you need to know about today's average rates.

Homebuyers took out a record $1.1 trillion in mortgage loans during the second quarter of 2020, and with good reason. Mortgage rates have repeatedly hit new lows, making securing a home loan more affordable than ever. And this trend will continue for another day, with the average interest rate on a 30-year fixed-rate mortgage once again coming in below 3.00% on Sept. 14.

While these low rates are expected to last a while, they are unprecedented even compared with recent history and many would-be borrowers would do well to lock in, thus ensuring they'll be able to pay off their debt at a low rate for the life of the loan.

To help you decide, check out today's average mortgage rates for Sept. 14.

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

30-year mortgage rates

On Sept. 14, the average interest rate for a 30-year fixed-rate mortgage was 2.958%. A rate below 3.00% was unheard of a year ago and this is an amazingly low rate -- especially as it is guaranteed not to change for the entire time you are paying off your loan balance.

At such a low rate, the monthly payment for principal and interest on a $200,000 mortgage would be just $839 and total costs of loan repayment would add up to $301,926. This doesn't include taxes and insurance, though, which are an extra expense you need to plan for when purchasing a home.

20-year mortgage rate

Although shorter-term loans often have lower rates than longer ones, that has not been the case recently with the 20-year fixed-rate mortgage compared with the 30-year fixed-rate loan. The average rate for a 20-year fixed-rate loan comes in at 3.008% as of Sept. 14, which is a bit above what you'd pay for the 30-year alternative.

Your monthly payment will be higher than with a 30-year loan as well, both because of the higher rate and the shorter repayment timeline. But total repayment costs are lower due to the fact that you're paying off your loan faster. Your monthly payment will add up to just $1,110 and your total repayment cost would come in at $266,399 for principal and interest.

15-year mortgage rates

Rates on 15-year mortgages are incredibly affordable right now, with the average rate for Sept. 14 coming in at just 2.475%. This is well below what you'd pay for either a 20-year or 30-year fixed-rate loan. Because the rates are so low and you're paying off your loan over such a short period of time, you'll see substantial interest savings -- although your monthly payment will be higher. You'd be looking at a monthly payment of $1,331 and total repayment costs of $239,621 for a $200,000 loan.

5/1 ARMs

The average interest rate for a 5/1 ARM is 3.443% as of Sept. 14. This is well above the average rate on a 30-year fixed-rate loan. Traditionally, one of the major benefits of an adjustable-rate mortgage is that it has a lower introductory rate than fixed-rate loans. Borrowers are willing to take on the risk of rates adjusting upward in order to benefit from this low introductory rate which, in the case of a 5/1 ARM, is locked in for the first five years and can then change along with the financial index it's tied to.

With the average rate on a 5/1 ARM above that of a 30-year loan, there's little reason to take on this type of risk. You can instead lock in at a low rate for the life of your loan, and won't have to worry about your payments going up if you can't sell or refinance before the rate begins adjusting.

Should I lock in a mortgage right now?

A mortgage rate lock guarantees you a specific rate for a preset period of time -- usually 30 days, but you may be able to lock in your rate for up to 60 days. You'll generally pay a fee for a mortgage rate lock, but in exchange, you're protected in the event that there's a substantial jump in rates between now and your loan closing date.

If you plan to close on your home within the next month, then it could pay to lock in your rate based on how today's numbers look, and also based on recent rate fluctuations. Today's rates are actually quite competitive across the board, so no matter what loan term you're interested in, you have a chance to lock in a good deal.

However, if your closing is more than a month away, you may want to choose a floating rate lock instead for what will generally be a higher fee, but a potentially worthwhile one. A floating rate lock allows you to snag a lower rate on your mortgage if rates fall prior to your closing, and given the way rates have moved in recent weeks, there's a chance they could go lower in time.

• 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

Before you lock in a loan with any lender, you should compare rates from at least three different mortgage lenders to maximize the chances of finding the most affordable loan possible. Different lenders have different standards regarding your credit score and other financial credentials, so shopping around can really pay off.