Mortgage – Today’s mortgage and refinance rates: January 28, 2021 | Rates climb
While you can still get historically low mortgage and refinance rates today, rates have increased slightly since last Thursday.
Now might be an excellent time to secure a low rate on a fixed-rate mortgage. However, you may want to steer clear of adjustable-rate mortgages.
ARMs alter your rate after an agreed-upon period of time. Darrin English, Senior Community Development loan Officer at Quontic Bank, told Insider these mortgages used to be more beneficial to the borrower, as they would offer lower introductory rates than the terms of many fixed rates.
Now, English said borrowers are at a disadvantage when it comes to ARM rates because they are starting higher than fixed rates with the risk of an increase after the introductory period expires.
If you’re able, think about refinancing or getting a fixed-rate mortgage soon.
Rates from Ad Practitioners LLC.
Since last Thursday, mortgage rates have slightly gone up, though they still remain at all-time lows.
Keep in mind that we’re showing you the national average rates for conventional mortgages, which may be what you consider “standard mortgages.” Rates will vary on government-backed mortgages through the FHA, VA, or USDA, and may be lower than the ones listed.
Mortgage rates are at striking lows in general. Low rates are frequently an indicator of a struggling economy. As the US continues to bear the brunt of the economic fallout from the COVID-19 pandemic, mortgage rates will presumably remain low.
Rates from Ad Practitioners LLC.
15-year fixed and 7/1 ARM refinance rates are down since last Thursday, while 30-year fixed and 10/1 refinance rates have narrowly increased.
With a 15-year fixed mortgage, it will take you 15 years to pay off your loan, and you’ll have a set interest rate for that time.
A 15-year mortgage is less expensive than a 30-year mortgage. You’ll pay off the loan in half the time, and you’ll get a lower interest rate.
Make note that a 15-year term means you’ll pay more per month than with a longer term. As you are paying off the same mortgage principal in half the time, your monthly payments will be higher.
With a 30-year fixed mortgage, you’ll pay down your mortgage over 30 years, and your rate will remain the same for the entire term.
You’ll be charged a higher interest rate on a 30-year fixed mortgage than on a shorter-term fixed-rate mortgage. You used to also pay a higher interest rate on 30-year fixed mortgages than on adjustable-rate mortgages. Now, 30-year terms have become the better deal.
Your monthly mortgage payments will be lower than if you chose a shorter-term mortgage because you’re spreading your payments out over an extended period of time.
In the long term, you’ll pay more in interest with a 30-year term than a 15-year mortgage because you’re paying a higher interest rate for more years.
An adjustable-rate mortgage, commonly referred to as an ARM, locks in your rate for the first few years then alters it periodically. A 10/1 ARM determines your rate for ten years; then your rate will increase or decrease once per year.
A fixed-rate mortgage may still be your best option — even though ARM rates are at historic lows right now. It may make sense to obtain a long-term low rate with a 30-year or 15-year fixed mortgage rather than chance an increased future rate with an ARM.
If you’re considering an ARM, you talk with your lender to figure out what your individual rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.
Whether you’re aiming to apply for a mortgage or to refinance, today may be an excellent time to secure a low mortgage rate. Both fixed-rate and adjustable-rate mortgages are at notable lows.
But if you’re not ready for this financial commitment, don’t feel pressured to decide now. Rates will likely stay low for the coming months and possibly years, so you have time to boost your financial portfolio. Here are a few ways you can get an improved mortgage rate
- Increase your credit score by making all your payments on time, paying down debts, or letting your credit age. You may want to review a copy of your credit report (which you can request for free) and check for any errors that could be bringing your score down.
- Save more for a down payment. The smallest amount you’ll need for your down payment will depend on which type of mortgage you want. The higher your down payment, the better an interest rate your lender is likely to offer you.
- 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, and an even better ratio can result in a lower rate. To improve your ratio, pay down debts or find opportunities to enhance your income.
If your finances are in order, you could secure a low rate today. If not, you still likely have a lot of time to rectify them and get an improved rate.
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.
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