Rates Down for All Loans

Mortgage rates are down across the board to start the week. If you will be buying a home and need a loan, keeping tabs on mortgage rate trends is a good idea. Here are average mortgage rates for Monday, July 26:

Data source: The Ascent’s national mortgage interest rate tracking.

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30-year mortgage rates

The average 30-year mortgage rate today is 3.043%, down 0.007% from Friday’s average of 3.050%. A mortgage loan at today’s average interest rate would cost you $424 per $100,000 borrowed. Over the life of the loan, total interest costs would be $52,614 per $100,000 in mortgage debt.

20-year mortgage rates

The average 20-year mortgage rate today is 2.772%, down 0.006% from Friday’s average of 2.778%. For each $100,000 borrowed at today’s average rate, your total monthly principal and interest payment would be $543. During your entire loan repayment period, you’d pay total interest costs of $30,381 per $100,000 borrowed.

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The cost of interest over time is reduced with this loan compared with the 30-year due to the shorter mortgage payoff timeline. However, since you are making many fewer monthly payments, each one must be higher with the 20-year loan than with the 30-year.

15-year mortgage rates

The average 15-year mortgage rate today is 2.343%, down 0.021% from Friday’s average of 2.364%. You’d be looking at a principal and interest payment of $659 per $100,000 borrowed at today’s average rate. The total costs of interest would add up to $18,696 per $100,000 borrowed.

By reducing the payment time further, the 15-year mortgage saves homeowners even more money on interest over the life of their loan. But higher monthly payments make this loan option unaffordable for many.

5/1 ARMs

The average 5/1 ARM rate is 2.882%, down 0.106% from Friday’s average of 2.988%. You are only guaranteed this rate for the first five years. Then it begins adjusting. If the financial index your rate is tied to shows rising rates, you could end up paying higher monthly payments and higher total loan costs over time. Think carefully about this risk.

Should I lock my mortgage rate now?

A mortgage rate lock guarantees you a certain interest rate for a specified period of time — usually 30 days, but you may be able to secure your rate for up to 60 days. You’ll generally pay a fee to lock in your mortgage rate, but that way, you’re protected in case rates climb between now and when you actually close on your mortgage.

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If you plan to close on your home within the next 30 days, then it pays to lock in your mortgage rate based on today’s rates — especially since they’re so competitive. But if your closing is more than 30 days away, you may want to choose a floating rate lock instead for what will usually be a higher fee, but one that could save you money in the long run. A floating rate lock lets you secure a lower rate on your mortgage if rates fall prior to your closing, and while today’s rates are still quite low, we don’t know if rates will go up or down over the next few months. As such, it pays to:

  • 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

To find out what rates are available to you, compare rates from at least three of the best mortgage lenders before locking in.

View more information: https://www.fool.com/the-ascent/mortgages/articles/current-mortgage-rates-july-26-2021-rates-down-for-all-loans/

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