As we approach the end of February, average mortgage rates have risen a bit today for fixed rate loans. Although they are still near their historic lows, rates have been trending upward recently. 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.
6 simple tips to get a 1.75% mortgage rate
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30-year mortgage rates
The 30-year average mortgage rate today stands at 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. The total interest charge would be $ 50,905 per $ 100,000 borrowed over the term of the loan.
20-year mortgage rates
The 20-year average mortgage rate today stands at 2.681%, up 0.026% from Friday’s average of 2.655%. If you borrow at today’s average rate, your monthly principal and interest payments would be $ 539 for every $ 100,000 borrowed. Your total interest charges over the term of the loan would equal $ 29,304 per $ 100,000 borrowed.
When you shorten your repayment term by a decade compared to the 30-year loan, you will have to commit to higher monthly payments. Of course, since you are paying interest for 10 years less, you may find that the total interest charge is considerably lower. This means your mortgage costs you less over time, even if you have to prepare for higher payments during your 20-year repayment schedule.
15-year mortgage rates
The 15-year average mortgage rate today stands at 2.305%, up 0.009% from Friday’s average of 2.296%. If you borrow at today’s average rate, you would have a monthly principal and interest payment of $ 658 for every $ 100,000 borrowed. During the entire repayment period of your loan, you would pay a total interest charge 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. The total amount of interest you save over time is considerable, however, so you may find that going for these higher payments is worth it if you can find them within your budget.
The average 5/1 ARM rate 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 to adjust once a year, up or down.
In recent months, the starting rate on ARM 5/1 has been higher than the rate on fixed rate alternatives. Although this is no longer the case, the difference between the initial rates is not enough to take the risk that your interest costs will increase 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 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.