Mortgage and refinance rates have remained more or less flat since last Tuesday. They are still at all-time lows.
Mat Ishbia, CEO of United Wholesale Mortgage, told Insider that you’ll likely get a better bargain on a fixed-rate mortgage than on an adjustable-rate mortgage.
Fixed rates are starting lower than ARM rates now, and there’s the potential for ARM rates to increase in the future. It may be a better move to lock in a low rate while you can, given your finances are in order.
Rates from Money.com
Since last Tuesday, 15-year and 30-year fixed mortgage rates have remained flat. 7/1 ARM and 10/1 ARM rates are slightly up.
We’re showing you the national average rates for conventional mortgages, which may be what you consider “standard mortgages.” Government-backed mortgages through the FHA, VA, or USDA may offer a better rate to those who are qualified.
Overall, mortgage rates remain at striking lows. Low rates are frequently an indicator of a floundering economy. Mortgage rates will probably stay low as the US continues to wade through the economic fallout from the COVID-19 pandemic.
Rates from Money.com
Refinance rates on fixed-rate and adjustable-rate mortgages haven’t changed much since last Tuesday. The 30-year fixed mortgage rate declined by two basis points.
If you take out a 15-year fixed mortgage, you’ll pay down your mortgage over a decade and a half, and you’ll have a locked-in interest rate the whole time.
A 15-year fixed mortgage is less expensive than a 30-year term. You’ll receive a lower interest rate, and you’ll pay off the mortgage in half of the time.
However, you’ll cough up more per month with a 15-year term than a longer term. You’ll pay off the same loan principal in half of the time.
If you get a 30-year fixed mortgage, it will take you three decades to pay down your mortgage, and your interest rate will remain constant for the life of the loan.
Your interest rate will be higher with a 30-year term than with a 15-year term. Additionally, you’ll pay more in interest with a 30-year fixed mortgage than a 15-year fixed mortgage because you’re paying a higher interest rate for an extended period.
On the bright side, your monthly payments will be smaller with a 30-year fixed mortgage than with a shorter term because you’re dividing your payments over more years.
An adjustable-rate mortgage, commonly known as an ARM, will lock in your rate for a set amount of time. Then your rate will fluctuate frequently. A 10/1 ARM keeps your rate constant for a decade, then bumps it up or down once per year.
ARM rates are at all-time lows now, but you still might prefer a fixed-rate mortgage. You can get a low rate for 15 to 30 years without worrying about a potential future rate increase with an ARM.
If you’re thinking about getting an ARM, ask your lender what your rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.
Both fixed and adjustable mortgage rates have dropped since last week and are at historic lows. It might be a good time to secure a low mortgage rate.
Whether you’re hoping to get a mortgage or refinance, you don’t need to hurry. Rates are probably going to remain low for the remainder of 2021, if not longer. Here are a few ways you can get the lowest possible rate:
- Increase your credit score. Making all your payments on time is the most important way to boost your credit score. You can also consider paying down your debts or letting your credit age.
- Save more for a down payment. You may be able to put down as little as 3% if you want a conventional mortgage, but the smallest amount will depend on which type of mortgage you want. You have a better chance getting an improved interest rate from your lender the higher your down payment.
- Lower your debt-to-income ratio. Your DTI ratio is the amount you pay toward debts each month, divided by your gross monthly income. Many lenders want to see a DTI ratio of 36% or less. To better your ratio, pay down debts or look for chances to increase your income.
If you’re financially ready, you can lock in a low rate today.
Ryan Wangman is a reviews fellow at Personal Finance Insider reporting on mortgages, refinancing, bank accounts, and bank reviews. In his past experience writing about personal finance, he has written about credit scores, financial literacy, and…