A few important mortgage rates moved higher today. The average interest rates for both 15-year fixed and 30-year fixed mortgages crept higher while average rates for 5/1 adjustable-rate mortgages also increased. Despite these increases, rates remain at nearly historic lows. If you’re looking to lock in a fixed rate, now is a good time to finance a home. Before you buy a house, remember to consider your personal needs and financial situation, and compare offers from different lenders to find the right one for you.
Compare nationwide home loan rates from various lenders
30-year fixed-rate mortgages
The average 30-year fixed mortgage interest rate is 3.21%, which is a growth of 6 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most frequently used loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will often have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 2.50%, which is an increase of 2 basis points from seven days ago. You’ll have a higher monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the better deal if you can afford the monthly payments. These usually include being able to get a lower interest rate, paying off your mortgage sooner and paying less total interest in the long run.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 3.25%, a rise of 7 basis points from seven days ago. You’ll usually get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. However, since the rate shifts with the market rate, you may end up paying more after that time, as described in the terms of your loan. Because of this, an adjustable-rate mortgage might be a good option if you plan to sell or refinance your house before the rate changes. But if that’s not the case, you might be on the hook for a significantly higher interest rate if the market rates shift.
Mortgage rate trends
We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders across the US:
Average mortgage interest rates:
ProductRateLast weekChange30-year fixed3.21%3.15%+0.0615-year fixed2.50%2.48%+0.0230-year jumbo mortgage rate2.99%2.97%+0.0230-year mortgage refinance rate 3.30%3.17%+0.13
Rates as of March 5, 2021.
How to shop for the best mortgage rate
To find a personalized mortgage rate, talk to your local mortgage broker or use an online mortgage service. When researching home mortgage rates, think about your goals and current financial situation. Specific mortgage interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a higher credit score, a higher down payment, a lower DTI and a lower LTV to get a lower interest rate. Apart from the interest rate, other factors including closing costs, fees, discount points and taxes might also affect the cost of your home. Make sure you speak with a variety of lenders — such as local and national banks, credit unions and online lenders — and comparison shop to find the best mortgage loan for you.
How does the loan term affect my mortgage?
One important thing you should consider when choosing a mortgage is the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. For adjustable-rate mortgages, interest rates are fixed for a certain number of years (commonly five, seven or 10 years), then the rate fluctuates annually based on the current interest rate in the market.
When deciding between a fixed-rate and adjustable-rate mortgage, you should take into consideration how long you plan to stay in your home. Fixed-rate mortgages might be a better fit if you plan on living in your new home for some time. While adjustable-rate mortgages may offer lower interest rates upfront, fixed-rate mortgages are more stable over time. However you could get a better deal with an adjustable-rate mortgage if you only plan to keep your house for a couple years. There is no “best” loan term as an overarching rule; it all depends on your goals and your current financial situation. Be sure to do your research and know what matters to you when choosing a mortgage.
Source by www.cnet.com