Mortgage News Daily – Today’s mortgage and refinance rates: February 9, 2021
Mortgage rates have fluctuated since last Tuesday, but they remain at historic lows in general. If you’re ready to buy a home or refinance, you’ll probably want to get a fixed-rate mortgage rather than an adjustable-rate mortgage.
Darrin English, Senior Community Development loan Officer at Quontic Bank, told Insider ARMs aren’t as beneficial as they used to be.
He said you can get a better rate with a 30-year loan — without the risk of your rate increasing down the line with an ARM. It may be in your best interest to secure a low rate while possible, provided your finances are in order.
Rates from Ad Practitioners LLC.
The rates for 15-year fixed mortgages have remained flat since last Tuesday, while 30-year fixed mortgage rates have increased marginally. Adjustable-mortgage rates have increased as well, and all rates remain at historic lows overall.
We’re supplying you with the national average rates for conventional mortgages, which may be what you consider “normal mortgages.” You may be eligible for a lower rate with a government-backed mortgage through the FHA, VA, or USDA.
Mortgage rates are at striking lows overall. Low rates frequently signify a struggling economy. As the US continues to bear the brunt of the economic fallout of the COVID-19 pandemic, mortgage rates will likely stay low.
Rates from Ad Practitioners LLC.
Refinance rates on adjustable-rate mortgages have gone up since last Tuesday, with the 7/1 ARM rate increasing by 32 basis points. Fixed mortgage rates have gone down slightly.
If you take out a 15-year fixed mortgage, it will take you 15 years to pay off your mortgage, and you’ll pay the same interest rate the whole time.
You’ll cough up more per month with a 15-year fixed mortgage than with a 30-year term because it will take you half the time to pay off the equivalent loan principal.
However, you’ll pay less overall with a 15-year term than a 30-year fixed mortgage. You’ll pay off the mortgage 15 years earlier, and you’ll get a lower interest rate.
If you take out a 30-year fixed mortgage, you’ll pay down your loan over three decades at a locked-in interest rate.
Your interest rate will be higher with a 30-year term than with a shorter 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.
However, your monthly payments will be smaller with a 30-year term than with a 15-year term because you’re splitting up your payments over more years.
With an adjustable-rate mortgage, you’ll secure your rate for a predetermined amount of time. Then, your rate will fluctuate periodically. A 7/1 ARM locks in your rate for seven years, then the rate will change once per year.
Even as ARM rates are currently at all-time lows, a fixed-rate mortgage might still be the better deal. You can lock in a low rate for the long term without chancing an increased ARM rate in the future.
If you’re considering getting an ARM, ask your lender what your individual rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.
It might be a good time to secure a low mortgage rate, as both fixed and adjustable mortgage rates are at all-time lows.
However, there’s no need to rush to apply for a mortgage or refinance. Rates will probably remain low well into 2021, if not longer, so you still have time to improve your financial profile. 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. The smallest amount of money required for your down payment will be contingent on which type of mortgage you want. The higher your down payment, the better an interest rate you’ll likely get.
- 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 improve your ratio, pay down debts or look for ways to boost your income.
You can secure a low rate now if your finances are in order — though you still have time to wait if you need to improve your financial standing.
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 homeownership.
Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.
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