Today's Mortgage Rates -- January 25, 2021: Rates Are Mixed

Average mortgage interest rates are mixed on Jan. 25. Here's what you need to know.

On Jan. 25, mortgage rates were mixed, with some trending up and others down. Although rates have gone through some ups and downs in recent weeks, they still remain extremely competitive. Here's what you need to know about average interest rates as we move towards the end of January.

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

30-year mortgage rates

The average 30-year mortgage rate today is 2.832%, down 0.007% from Friday's average of 2.839%. At today's average rate, you'd pay $413 per month in principal and interest per $100,000 borrowed. This doesn't include property taxes or homeowner's insurance payments. Over the life of the loan, your total interest costs would add up to $48,535 per $100,000 borrowed.

20-year mortgage rates

The average 20-year mortgage rate today is 2.615%, up 0.002% from Friday's average of 2.613%. If you borrow at today's average rate, your monthly principal and interest payment would be $536 per $100,000 borrowed. During your entire loan repayment period, you'd pay total interest costs of $28,526 per $100,000 borrowed.

A 20-year mortgage cuts 10 years off your payment timeline compared with a 30-year loan. This makes your total borrowing costs much lower, but as you can see it results in a higher monthly payment. You'll need to consider whether your priority is saving on interest or paying less each month when you decide which loan is right for you.

15-year mortgage rates

The average 15-year mortgage rate today is 2.290%, down 0.006% from Friday's average of 2.296%. At today's average rate, the monthly principal and interest payment would add up to $657 per $100,000 in mortgage debt. For each $100,000 you borrow at today's average rate, total interest costs would add up to $18,251.

Since a 15-year mortgage loan comes with an even shorter repayment timeline, you'd become debt free much sooner and further reduce your interest costs compared with the 20-year loan. But, of course, your monthly payments would climb even higher.

5/1 ARMs

The average 5/1 ARM rate is 3.189%, up 0.229% from Friday's average of 2.960%. An ARM isn't a good option right now. The starting interest rate is above the starting rate on a 30-year fixed-rate loan so you won't benefit from interest savings now. And your rate is almost assuredly going to rise once it begins adjusting because rates are near record lows now.

Should I lock my mortgage rate now?

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 so 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:

• 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

To find out what rates are available to you, compare rates from at least three of the best mortgage lenders before locking in.