Mortgage rates are mostly down today. Should you apply for a home loan now?
Mortgage rates have mostly dropped from yesterday. This is what they look like now:
Data source: The Ascent's national mortgage interest rate tracking.
30-year mortgage rates
The average 30-year mortgage rate today is 2.824%, down 0.008% from yesterday. At today's rate, you'll pay principal and interest of $411.96 for every $100,000 you borrow. That doesn't include added expenses like property taxes and homeowners insurance premiums.
20-year mortgage rates
The average 20-year mortgage rate today is 2.627%, up 0.012% from yesterday. At today's rate, you'll pay principal and interest of $536.16 for every $100,000 you borrow. Though your monthly payment will go up by $124.20 with a 20-year, $100,000 loan versus a 30-year loan of the same amount, you'll save $19,626.21 in interest over the course of your repayment period for every $100,000 you borrow.
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15-year mortgage rates
The average 15-year mortgage rate today is 2.279%, down 0.011% from yesterday. At today's rate, you'll pay principal and interest of $656.48 for every $100,000 you borrow. Compared to the 30-year loan, your monthly payment will be $244.52 higher per $100,000 in mortgage principal. Your interest savings, however, will amount to $30,137.85 over the life of your repayment period per $100,000 of mortgage debt.
5/1 ARMs
The average 5/1 ARM rate is 3.118%, down 0.071% from yesterday. Since the initial rate you'll get with a 5/1 ARM is higher than what you can get with a fixed-rate loan today, an adjustable-rate mortgage doesn't make a lot of sense. Not only will you pay more for your first five years after signing your mortgage, but you'll also run the risk that your interest rate will go up over time.
Should I lock in my mortgage rate now?
A mortgage rate lock guarantees you a specific interest rate for a certain 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 if rates climb between now and when you close on your home loan.
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 still extremely low. 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 loan if rates fall before you close on your mortgage, and while today's rates are very competitive, 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
If you're ready to apply for a mortgage, reach out to a few different lenders and see what rates they have available. There are different factors lenders will consider when offering up rates -- your income, your credit score, and your existing debt. Each lender will also set its own closing costs, so explore your options to come away with the best deal on a whole. You may find that you can save thousands of dollars up front and through the years by shopping around and identifying the best offer of the lot.
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January 26, 2021 at 10:33PM
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Current Mortgage Rates -- January 26, 2021: Rates Mostly Drop - Motley Fool
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