by Maurie Backman | Aug. 13, 2020
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Knowing what mortgage rates look like can help you determine whether the time is right to lock one in.
Mortgage rates can change from day to day. If you want to buy a new home, it pays to constantly keep tabs on what rates look like because you might reap some serious savings by timing your mortgage application strategically. This is what mortgage rates look like today:
|30-Year Fixed Mortgage Rate||3.073%||3.263%|
|20-Year Fixed Mortgage Rate||3.10%||3.252%|
|15-Year Fixed Mortgage Rate||2.598%||2.835%|
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The average interest rate for a 30-year fixed mortgage today is 3.073%. That's a terrific rate, though it is worth noting that earlier in the week, the average 30-year mortgage rate fell just below 3%. Still, at today's rate, for a $200,000 mortgage, you'll be looking at a monthly payment of $851. That $851 is just principal and interest; it does not include property taxes, homeowners insurance, or HOA fees. But to be clear, it's a very good deal.
The average interest rate for a 20-year fixed mortgage is 3.10%. Like the 30-year loan, earlier in the week, the average 20-year mortgage was just below 3%, but that doesn't mean you shouldn't lock in today if you can swing a higher monthly payment that what you'd get with a 30-year loan. At today's rate, for a $200,000 mortgage, you're looking at a monthly payment of $1,119 (again, based on principal and interest only). If you choose a 20-year mortgage over a 30-year loan, you'll shave off a substantial amount of interest over the life of your repayment period.
The average interest rate for a 15-year fixed mortgage is 2.598%. That's just a slight jump from earlier in the week. At today's rate, for a $200,000 mortgage, you're looking at a monthly payment of 1,342 for principal and interest on your loan. It pays to lock in a 15-year loan if you can swing the higher monthly payment and want to be free of mortgage debt sooner.
The average interest rate for a 5/1 ARM is 3.244%, which is only a modest jump from earlier in the week. But seeing as how you can score a 30-year fixed loan at a lower interest rate right now, the 5/1 ARM doesn't make a whole lot of sense. Usually, the point of an adjustable-rate mortgage is to snag a lower rate for the near term, after which you take the risk of your rate climbing. But if you're not getting savings up front, then there's less value in getting an ARM.
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 pay a fee for a mortgage rate lock, but in exchange, you're protected in case there's a substantial jump in rates between now and the date you close on your home.
If you plan to close on your home within the next 30 days, then it pays to lock in your rate based on how today's numbers look. But 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 one that could save you money in the long run. A floating rate lock allows you to snag a lower rate on your mortgage if rates fall prior to your closing, and while today's rates are quite competitive, we don't know what the next few months have in store. As such, it pays to:
Today's low rates make locking in a mortgage tempting. But before you go that route, be sure to shop around with different mortgage lenders and see what they come back to you with. There are different factors that go into determining what mortgage rate you qualify for, like your credit score and level of existing debt. Getting more than one offer will help you rest easy knowing you managed to get yourself a really good 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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