As February draws to a close, average mortgage rates have been on the rise. Today is no exception.
Although rates have been trending up from historic lows, they are still very competitive. Here’s what you need to know about average mortgage rates for Feb. 24, 2021.
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30-year mortgage rates
The average 30-year mortgage rate today is 3.017%, up 0.037% from yesterday’s average of 2.980%. A mortgage loan at today’s average interest rate would cost you $423 per $100,000 borrowed. Total interest costs would be $52,108 per $100,000 in mortgage debt over the life of the loan.
20-year mortgage rates
The average 20-year mortgage rate today is 2.733%, up 0.018% from yesterday’s average of 2.715%. If you borrow at today’s average rate, you’d have a monthly principal and interest payment of $541 per $100,000 borrowed. During your entire loan repayment period, you’d pay total interest costs of $29,918 per $100,000 borrowed.
When you shorten your repayment timeline by choosing a 20-year loan rather than a 30-year mortgage, you raise your monthly payments considerably, as you can see. But you pay interest for far less time, so your total costs are much lower with this loan option.
15-year mortgage rates
The average 15-year mortgage rate today is 2.350%, up 0.036% from yesterday’s average of 2.314%. A loan at today’s average rate would cost you $660 per month in principal and interest for each $100,000 you borrow. For each $100,000 you borrow at today’s average rate, total interest costs would add up to $18,755.
With an even shorter payoff time, a 15-year loan comes with higher monthly costs than a 20-year or 30-year loan. But it reduces total interest costs even more than either of the other options. There’s always a tradeoff between paying more each month but less over time or keeping your monthly payments as low as possible. You’ll need to decide which option is best for you.
The average 5/1 ARM rate today is 3.288%, up 0.208% from yesterday’s average of 3.080%. Traditionally an adjustable-rate mortgage could be a smart choice if you get a considerable discount on your starting interest rate compared with fixed-rate loan options.
In recent months, however, the 5/1 ARM has actually had a higher starting interest rate than the 30-year fixed-rate loan. This is unusual and it means that it’s not worth taking the chance of it adjusting even higher and raising your interest costs and monthly payment down the road.
Should I lock in a mortgage right now?
A mortgage rate lock guarantees you a specific rate for a preset period of time — usually 30 days, but you may be able to lock in your rate for up to 60 days. You’ll generally pay a fee for a mortgage rate lock, but in exchange, you’re protected in the event that there’s a substantial jump in rates between now and your loan closing date.
If you plan to close on your home within the next month, then it could pay to lock in your rate based on how today’s numbers look, and also based on recent rate fluctuations. Today’s rates are actually quite competitive across the board, so no matter what loan term you’re interested in, you have a chance to lock in a good deal.
However, if your closing is more than a month away, you may want to choose a floating rate lock instead for what will generally be a higher fee, but a potentially worthwhile one. A floating rate lock allows you to snag a lower rate on your mortgage if rates fall prior to your closing, and given the way rates have moved in recent weeks, there’s a chance they could still go lower in time.
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT if closing in 60 days
No matter what decision you make, aim to get offers from different mortgage lenders to increase your chances of securing the most favorable rate. Each lender sets its own requirements with regard to factors like your credit score, so it pays to get offers you can compare.
View more information: https://www.fool.com/the-ascent/mortgages/articles/current-mortgage-rates-for-february-24-2021-rates-up-again/