Current Mortgage Rates – Jan 20, 2021: Rates Reverse Upward Trend

On January 20, 2021, mortgage rates on all loans fell. Here’s what you need to know about average interest rates today.

On January 20, 2021 mortgage interest fell a bit. Although interest rates have been rising in recent days, this trend has reversed today, with interest rates falling slightly for all loans. Rates are staying near record lows, so it’s still a great time to get a home loan.

Here’s what you need to know about average rates today.

Data source: Tracking the Ascent’s national mortgage interest rates

Mortgage interest on 30 years

The average 30-year mortgage interest today is 2.842%, down 0.019% from yesterday’s average of 2.861%. For every $ 100,000 you borrow at the current average rate, your total monthly principal and interest payment would be $ 413. Over the life of the loan, your total interest expense would add up to $ 48,727 per $ 100,000 borrowed.

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Mortgage interest on 20 years

The average 20-year mortgage interest today is 2.599%, down 0.063% from yesterday’s average of 2.662%. You would be looking at a principal and interest payment of $ 535 per $ 100,000 borrowed at today’s average rate. During the entire repayment period of your loan, you pay the total interest expense of $ 28,337 per $ 100,000 borrowed.

With a loan with a term of 20 years, 120 installments are less than with a loan with a term of 30 years. Since you are making fewer payments, each payment should be higher. But your savings on the total cost of interest is significant as you pay ten years less interest.

Mortgage interest on 15 years

The average Mortgage interest of 15 years today is 2.262%, down 0.023% from yesterday’s average of 2.285%. At the current average rate, you pay $ 656 per month in principal and interest per $ 100,000 borrowed. Total interest expense would be $ 18,016 per $ 100,000 of mortgage debt over the life of the loan.

A loan with a term of 15 years halves the number of payments compared to a mortgage with a term of 30 years. Obviously, the monthly payments have to be much higher because you are making so much less payments. But the total interest expense will be much lower due to the shortened repayment time.

5/1 ARMs

The average 5/1 ARM speed is 3.230%, down 0.143% from yesterday’s average of 3.373%. An ARM is a riskier loan option because your interest rate is only fixed for a limited time, after which it can be adjusted. With a 5/1 ARM, it is repaired for the first five years and can be adjusted once a year thereafter.

It may be worth taking the risk of an ARM if you get a lower initial interest rate than with fixed-rate alternatives and you plan to move or refinance before interest rates rise. It may also make sense if you think rates will drop. But since rates remain very low at this point and a 30-year fixed-rate loan has a lower interest rate than the ARM, it wouldn’t make sense to get a floating-rate loan right now.

Should I lock my mortgage interest now?

A mortgage interest lock guarantees you a certain interest rate for a set period of time – usually 30 days, but you may be able to secure your rate for up to 60 days. You generally pay a fee to record your mortgage interest, but that way you are protected in case interest rates rise between now and when you actually take out your mortgage.

If you plan to close your home within the next 30 days, it pays to record your mortgage interest based on current rates – especially since they are so competitive. But if your close is more than 30 days away, you can choose a variable rate lock instead for what will usually be a higher fee, but one that can save you money in the long run. With a variable rate lock, you can get a lower interest rate on your mortgage if the interest rate falls before the interest rate is closed, and while current rates are still quite low, we don’t know if interest rates will rise or fall in the coming months. As such, it pays to:

  • KEY LOCK when you get closer 7 days
  • KEY LOCK when you get closer 15 days
  • KEY LOCK when you get closer 30 days
  • FLOAT when you get closer 45 days
  • FLOAT when you get closer 60 days

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

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