As we move towards the end of February, the average mortgage rates increased a little today for fixed rate loans. Although still close to all-time lows, rates have recently been on an upward trend. Borrowers can consider locking in their loan while interest rates remain competitive. Here’s what you need to know about average mortgage rates as of February 22, 2021.
|Type of mortgage||Today’s interest rate|
|30-year fixed mortgage||2.955%|
|20-year fixed mortgage||2.681%|
|15-year fixed mortgage||2.305%|
30-year mortgage rates
The average 30-year mortgage rate today is 2.955%, up 0.031% from Friday’s average of 2.924%. A loan at the current average rate would cost you $419 per month in principal and interest for every $100,000 you borrow. You will also have to pay insurance and property taxes. Total interest charges would be $50,905 per $100,000 borrowed over the life of the loan.
20-year mortgage rates
The average 20 year mortgage rate today is 2.681%, up 0.026% from Friday’s average of 2.655%. If you borrowed at today’s average rate, your monthly principal and interest payment would be $539 for every $100,000 borrowed. Your total interest costs over the term of the loan would equal $29,304 for every $100,000 borrowed.
When you shorten your repayment period by a decade compared to the 30-year loan, you will have to commit to higher monthly payments. Of course, since you’re paying interest for 10 years less, you can see that the total interest charges are considerably lower. This means your mortgage will cost you less over time, although you should be prepared for higher payments during your 20-year repayment period.
15-year mortgage rates
The average 15-year mortgage rate today is 2.305%, up 0.009% from Friday’s average of 2.296%. If you borrowed at today’s average rate, you would have a monthly repayment of principal and interest of $658 for every $100,000 borrowed. Throughout the repayment period of your loan, you will pay total interest costs of $18,377 for every $100,000 borrowed.
With an even shorter payment term, the monthly costs are higher with the 15-year loan than with the 20 or 30-year alternative. However, the total amount of interest you save over time is considerable, so you may find these higher payments worth it if you can find them within your budget.
The average Arm rate 5/1 is 2.808%, down 0.057% from Friday’s average of 2.865%. This initial starting rate is only locked in for the first five years with a variable rate mortgage. After that, it might start adjusting once a year, up or down.
In recent months, the starting rate on the ARM 5/1 has been higher than the rate on fixed-rate alternatives. Although this is no longer the case, there is not enough difference between the initial rates to risk your interest costs increasing over time. This is especially true as rates will almost certainly rise once they start to adjust, as they are still so close to record lows right now.
Should I lock in my mortgage rate now?
A mortgage rate lock guarantees you a certain interest rate for a set period of time – usually 30 days, but you may be able to guarantee your rate for up to 60 days. You’ll usually pay a fee to lock in your mortgage rate, but that way you’re protected if rates go up between now and when you close out your mortgage.
If you’re planning on closing your home in the next 30 days, it pays to lock in your mortgage rate based on today’s rates, especially since they’re so competitive. But if your close is more than 30 days away, you might want to choose a variable rate lock instead for what will usually be higher fees, but could save you money in the long run. A variable rate lock allows you to get a lower rate on your mortgage if rates drop before you close, 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 for:
- LOCK if closing 7 days
- LOCK if closing 15 days
- LOCK if closing 30 days
- FLOAT if closing 45 days
- FLOAT if closing 60 days
To find out what rates are available to you, compare the rates of at least three of the best mortgage lenders before locking up.
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Chances are interest rates won’t stay at multi-decade lows much longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger on buying a new home.
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