A handful of closely watched mortgage rates fell today. Both 15-year and 30-year fixed mortgage rates have declined. At the same time, the average rates of 5/1 variable rate mortgages have also been reduced. Mortgage interest rates are never set in stone, but interest rates are at their lowest in years. If you are thinking of financing a home, maybe now is a great time to get a fixed rate. Before buying a home, don’t forget to consider your personal needs and financial situation, and speak with several lenders to find the one that’s right for you.
See mortgage rates for different types of loans
30-year fixed rate mortgages
The 30-year average fixed mortgage interest rate is 2.96%, down 5 basis points from a week ago. (One basis point equals 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will usually have a lower monthly payment than a 15 year mortgage, but usually a higher interest rate. While you will pay more interest over time – you pay off your loan over a longer period – if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.
15-year fixed rate mortgages
The average rate for a 15-year fixed-rate mortgage is 2.25%, down 5 basis points from seven days ago. You will likely 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 best deal, as long as you can afford the monthly payments. You will usually get a lower interest rate and pay less interest overall because you pay off your mortgage much faster.
5/1 adjustable rate mortgages
A 5/1 variable rate mortgage has an average rate of 2.97%, down 5 basis points from seven days ago. With an adjustable rate mortgage, you will typically get a lower interest rate than a 30-year fixed mortgage for the first five years. But because the rate adjusts to the market rate, you could end up paying more after this period, as described in your loan terms. For this reason, an ARM can be a good option if you plan to sell or refinance your home before the rate changes. But if it doesn’t, you might be forced to pay a much higher interest rate if market rates change.
Mortgage rate trends
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders in the United States:
|term of the loan||Daily rate||Last week||Change|
|30 year mortgage rate||2.96%||3.01%||-0.05|
|15-year fixed rate||2.25%||2.30%||-0.05|
|Giant 30-year mortgage rate||2.80%||2.78%||+0.02|
|30-year mortgage refinancing rate||2.94%||3.00%||-0.06|
Prices exact as of August 6, 2021.
How to shop for the best mortgage rate
You can get a personalized mortgage rate by connecting with your local mortgage broker or by using an online calculator. Be sure to consider your current finances and goals when looking for a mortgage. Specific mortgage rates will vary based on factors such as credit rating, down payment, debt-to-income ratio, and loan-to-value ratio. Typically, you want a good credit score, larger down payment, lower DTI, and lower LTV to get a lower interest rate. Besides the mortgage interest rate, factors such as closing costs, fees, points of discount, and taxes can also affect the cost of your home. Be sure to shop around with multiple lenders – for example, credit unions and online lenders in addition to local and state banks – to get a mortgage that’s best for you.
What is a good loan term?
When choosing a mortgage, it’s important to consider the length of the loan or the repayment schedule. The most commonly offered loan terms 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 for a fixed rate mortgage are set for the term of the loan. For variable rate mortgages, the interest rates are the same for a number of years (most often five, seven, or 10 years), and then the rate fluctuates annually based on the market interest rate. When choosing between a fixed rate mortgage and an adjustable rate mortgage, you need to consider how long you plan to stay in your home. For those who are planning to live long term in a new home, fixed rate mortgages may be the best option. Fixed rate mortgages offer greater stability over time compared to variable rate mortgages, but variable rate mortgages may offer lower interest rates upfront. If you don’t plan on keeping your new home for more than three to ten years, an adjustable rate mortgage may give you a better deal. The best loan term is entirely up to your circumstances and goals, so be sure to think about what’s important to you when choosing a mortgage.