Homebuyers will find that they can still benefit from a competitive rate on a loan, despite the fact that rates are rising from the record levels seen in the heart of the pandemic. Here are the average mortgage rates for August 18, 2021 to help you determine how much the typical borrower would pay for a home loan:
6 simple tips to get a 1.75% mortgage rate
Secure access to The Ascent’s free guide on how to get the lowest mortgage rate when buying your new home or refinancing. Rates are still at their lowest for decades, so act today to avoid missing out.
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30-year mortgage rates
The 30-year average mortgage rate today stands at 3.078%, down 0.011% from yesterday’s average of 3.089%. If you borrow at today’s average rate, your monthly principal and interest payments would be $ 426 for every $ 100,000 borrowed. The total interest charge would be $ 53,296 per $ 100,000 borrowed at today’s average rate.
20-year mortgage rates
The 20-year average mortgage rate today stands at 2.831%, down 0.012% from yesterday’s average of 2.843%. You would consider a principal and interest payment of $ 546 per $ 100,000 borrowed at today’s average rate. During the entire repayment period of your loan, you would pay a total interest charge of $ 31,082 per $ 100,000 borrowed.
As you can see, you have to pay more each month if you choose a 20 year loan rather than a 30 year loan. When you shorten your repayment period, each monthly payment is higher because you have to pay off your entire loan faster. However, you save a lot of money over time on interest because you don’t pay interest for that long.
15-year mortgage rates
The 15-year average mortgage rate today stands at 2.326%, down 0.007% from yesterday’s average of 2.333%. For every $ 100,000 borrowed at today’s average rate, your total monthly payment of principal and interest would be $ 659. Over the life of the loan, your total interest charges would be $ 18,545 for every $ 100,000 borrowed.
A low interest rate and a short repayment term make this loan very affordable over time. Of course, you need to be prepared to face significantly higher monthly payments over the 15 years that you are paying off the loan.
The average 5/1 ARM rate is 2.989%, up 0.027% from yesterday’s average of 2.962%. ARM stands for Variable Rate Mortgage, and after five years that rate may begin to adjust with a financial index to which it is linked. Rates are expected to rise over time as they are currently near their all-time low. This would make both your monthly payments and the total cost of borrowing more expensive.
Should I lock in my mortgage rate now?
A mortgage rate freeze guarantees you a certain interest rate for a specified period of time – typically 30 days, but you may be able to guarantee your rate for up to 60 days. You will usually pay a fee to lock in your mortgage rate, but this way you are protected in the event of a rate hike before your mortgage closes.
If you plan to close your home within the next 30 days, it pays to lock in your mortgage rate based on today’s rates, especially since they are very competitive. But if your close is more than 30 days away, you might want to choose an adjustable rate lock instead for what will usually be a higher fee, 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 rates today are still quite low, we don’t know if rates will go up or down. over the next few months. As such, it is beneficial to:
- 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 top mortgage lenders before you lock in.