Today's Mortgage Rates - August 14, 2020

Thinking about becoming a homeowner or refinancing your mortgage? Here are the average mortgage rates for Aug. 14, 2020.

Would-be homeowners have been rejoicing in recent weeks as mortgage rates have repeatedly hit record lows. In fact, now may be the best time ever to buy a house if you're a well-qualified buyer. To see how much you can expect to pay, check out today's mortgage rates for Aug. 14, 2020.

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

30-year mortgage rates

A 30-year mortgage is popular among homeowners because it provides a fixed payment for the life of the loan and keeps payment costs reasonable due to the long payoff timeline. Those looking to buy can benefit from some of the lowest 30-year mortgage rates in history, with an average interest rate of just 3.005% as of August 14. On a $200,000 loan, this rate would result in a monthly payment of $844 per month for principal and interest and the total mortgage cost over the life of the loan would be just $303,749. To benefit from this rock-bottom interest rate, you should seriously consider locking in if you're shopping for a home.

20-year mortgage rates

A 20-year mortgage is less common, but can be a good compromise for those looking to repay their home loan sooner than 30 years but who can't afford the higher monthly payments associated with a 15-year mortgage. Rates also remain very low for 20-year loans and are worth locking in, with the average rate of 3.011% resulting in a monthly principal and interest payment of $1,110 for a $200,000 loan. Total costs over the life of the 20-year loan would be $266,471, so borrowers who choose this option would own their home free-and-clear 10 years sooner while saving over $37,000 in interest.

15-year mortgage rates

Interest rates on a 15-year mortgage are extremely low, with the average interest rate coming in at just 2.575% on August 14. These loans have a much lower rate than a 30-year loan and total repayment costs will be much lower. However, monthly payments can be too high for some buyers since you must pay enough to cover total principal and interest costs in half the time. In fact, even at today's incredibly-low rates, the monthly payment for principal and interest on a 15-year $200,000 mortgage would be $1,341. If you can afford this, your total mortgage cost would be just $241,317 so you'd save over $62,000 in interest compared with the 30-year mortgage. The low rate is again worth locking in.

5/1 ARMs

Adjustable-rate mortgages can be smart options in circumstances where the starting interest rate is below what you'd pay on a fixed-rate loan and you plan to either move or refinance before the rate starts adjusting. In the case of a 5/1 ARM, that would happen after five years. Because the average interest rate on a 5/1 ARM is 3.260%, which is above the rate on a 30-year fixed rate mortgage, there's little reason for any borrower to take the risk associated with an adjustable-rate loan option. Unless you're confident rates will decline in five years -- which is unlikely since they're near record lows -- it makes sense to secure a fixed-rate loan at today's low rates.

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 still 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

Whether you're eager to lock in now or hope to see rates fall further, it's important to shop around to get quotes from several mortgage lenders to ensure you get the most affordable loan possible. Each lender has its own criteria for minimum credit score and other qualifying factors, so comparing offers from several lenders to find the best loan terms just makes sense.