Rates Trend Lower on Fixed-Rate Options

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Average mortgage rates fell for fixed-rate loans on this final Monday in April. Anyone who is considering taking out a mortgage to buy a home should keep tabs on how rates are trending so they’ll understand what they can expect to pay to borrow.

Here are today’s average mortgage rates for April 26, 2021:

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 3.149%, down 0.007% from Friday’s average of 3.156%. If you borrow at today’s average rate, your monthly principal and interest payment would be $430 per $100,000 borrowed. Total interest costs would add up to $54,686 per $100,000 borrowed over the life of the loan.

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20-year mortgage rates

The average 20-year mortgage rate today is 2.918%, down 0.01% from Friday’s average of 2.928%. A loan at today’s average rate would cost you $551 per month in principal and interest for each $100,000 you borrow. You’d be looking at total interest costs of $32,120 per $100,000 in mortgage debt over the life of the loan.

You’ll end up with much lower total costs over time with a 20-year mortgage compared with a 30-year mortgage. But you will pay more each month due to the fact that you’re making many fewer payments. Each one needs to be higher to get your debt paid off a decade sooner than with the 30-year loan.

15-year mortgage rates

The average 15-year mortgage rate today is 2.407%, down 0.015% from Friday’s average of 2.422%. A mortgage loan at today’s average interest rate would cost you $662 per $100,000 borrowed. For each $100,000 you borrow at today’s average rate, total interest costs would add up to $19,236.

By shortening the repayment timeline even more compared with the 20-year loan, the 15-year gives you the maximum interest savings over time. Making the high monthly payments required could become a financial burden though.

5/1 ARMs

The average 5/1 ARM rate is 2.921%, up 0.016% from Friday’s average of 2.905%. Although this loan may seem attractive since the starting interest rate is below the average rate on a 30-year fixed-rate loan, it’s guaranteed only for the first five years. It will move with a financial index after that, so you could find yourself with higher monthly payments and a costlier loan over time.

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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.

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

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View more information: https://www.fool.com/the-ascent/mortgages/articles/todays-mortgage-rates-april-26-2021-rates-trend-lower-on-fixed-rate-options/

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