Today's Mortgage Rates -- January 6, 2021: Rates Are Mixed

What are mortgage rates looking like on Jan. 6?

On Jan. 6, 2021, mortgage rates declined for most fixed-rate loans but went up on the 30-year option. Home loans are still very affordable at these rates, but if you're considering purchasing a home you need to think about your overall financial situation to ensure you're ready.

As you make your choice, here's what you need to know about average mortgage rates today.

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

30-year mortgage rates

The average 30-year mortgage rate today is 2.757%, up 0.005% from yesterday's average of 2.752%. For each $100,000 borrowed at today's average rate, your total monthly principal and interest payment would be $409. Total interest costs would add up to $47,100 per $100,000 borrowed over the life of the loan.

20-year mortgage rates

The average 20-year mortgage rate today is 2.620%, down 0.057% from yesterday's average of 2.677%. At today's average rate, you'd pay $536 per month in principal and interest per $100,000 borrowed. Over the life of the loan, total interest costs would be $28,584 per $100,000 in mortgage debt.

If you're considering a 20-year mortgage instead of a 30-year one, you'll need to decide if the higher monthly payments associated with this loan are worth the interest savings over time. Both result from the fact you're paying off your loan in a decade less time.

15-year mortgage rates

The average 15-year mortgage rate today is 2.191%, down 0.019% from yesterday's average of 2.210%. A mortgage loan at today's average interest rate would cost you $652 per $100,000 borrowed. Your total interest costs over the life of the loan would equal $17,421 per $100,000 borrowed.

A 15-year loan has an even larger monthly payment and saves you even more in interest than the 20-year option since your interest rate is much lower and you're repaying your loan in a very short time.

5/1 ARMs

The average 5/1 ARM rate is 3.481%, up 0.255% from yesterday's average of 3.226%. Historically, ARMs have had lower starting rates than fixed-rate alternatives and borrowers have been willing to take the risk of their rates rising in exchange for the savings this provided. With rates above the 30-year and the chance they'll go up even further after five years, the 5/1 ARM isn't a good loan option right 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.