Today's mortgage and refinance rates: February 3, 2021 | Rates waver

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Many mortgage and refinance rates have decreased since last Wednesday, though a few have gone up. Rates remain at historical lows in general. 

It could be a good opportunity to secure a low rate on a fixed-rate mortgage today — but you may want to steer clear of an adjustable-rate mortgage. 

With an ARM, your rate changes after a set amount of time. Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Insider borrowers used to get a better deal on ARMs than on fixed-rate mortgages. Introductory adjustable interest rates were frequently lower than fixed rates, but he said this isn’t the case anymore. 

ARM rates are starting higher than fixed rates, with a risk of a rate increase after the introductory period expires. 

If your finances are in order, consider getting a fixed-rate mortgage or refinancing soon.

Mortgage rates on Wednesday, February 3, 2021

Mortgage type Average rate today Average rate last week
15-year fixed 2.33% 2.31%
30-year fixed 3.09% 3.06%
7/1 ARM 3.86% 3.96%
10/1 ARM 3.81% 3.93%

Rates from Ad Practitioners LLC.

Fixed mortgage rates have increased marginally since last Wednesday, while adjustable mortgage rates have decreased. All mortgage rates remain at significant lows.  

Keep in mind that we’re showing you the national average rates for conventional mortgages, which may be what you consider “normal mortgages.” You may qualify for a lower rate on government-backed mortgages through the FHA, VA, or USDA.

Mortgage rates remain at all-time lows overall. Low rates are frequently an indicator of a struggling economy. Rates will probably remain low as the US continues to grapple with the economic impact of the COVID-19 pandemic. 

Mortgage refinance rates on Wednesday, February 3, 2021

Mortgage type Average rate today Average rate last week
15-year fixed 2.59% 2.58%
30-year fixed 3.52% 3.59%
7/1 ARM 4.23% 4.36%
10/1 ARM 4.22% 4.4%

Rates from Ad Practitioners LLC.

Since last Wednesday, refinance rates on adjustable-rate mortgages have decreased. Fixed rates haven’t changed much, and rates continue to stay low in general.

How do 15-year fixed mortgage rates work?

With a 15-year fixed mortgage, it will take you 15 years to pay off your loan, and you’ll have a constant interest rate for the entire term. 

A 15-year fixed mortgage is less expensive than a 30-year fixed mortgage. It will take you half the time to pay off the mortgage, and you’ll also receive a lower interest rate. 

However, you’ll pay more per month with a 15-year term than a 30-year term. Your monthly payments will be higher because you will pay the same mortgage principal in half the time. 

How do 30-year fixed mortgage rates work?

With a 30-year fixed mortgage, it will take you 30 years to pay off your mortgage, and your interest rate will remain the same the whole time. 

You’ll pay a higher interest rate with a 30-year term than with a shorter term. The 30-year fixed mortgages also used to come with a higher interest rate than adjustable-rate mortgages. Now, 30-year terms have become the better deal.

It will cost you more in interest with a 30-year fixed mortgage than a 15-year mortgage, as you’re paying a higher interest rate for longer. 

However, you’ll pay less per month than if you chose a shorter-term mortgage because you’re spreading out your payments out over an extended period. 

How do ARMs work?

While a fixed-rate mortgage locks in your rate for the life of the loan, with an adjustable-rate mortgage, your rate will remain steady for the first several years then fluctuate periodically. A 7/1 ARM keeps your rate the same for seven years. Then, your rate will change annually. 

A fixed-rate mortgage may still be your best bet — even though ARM rates are currently at all-time lows. You can lock in a low rate for 15 or 30 years without risking your rate going up with an ARM.

If you’re considering an ARM, talk with your lender to determine what your individual rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.

Ways to get a low mortgage rate

It may be an excellent time to lock in a low mortgage rate. 

You can get historically low rates on both fixed-rate and adjustable-rate mortgages. However, if you’re thinking about applying for a mortgage or refinancing, there’s no need to hurry. Rates will probably remain low well into 2021, if not longer, so you have time to improve your financial standing. 

If you’re looking to get the lowest possible rate, take a look at these tips:

  • Increase your credit scoreStart by making your payments on time, paying down your debts, or letting your credit age. You’ll get a lower interest rate with a higher score, and a score of at least 700 will likely get you an improved rate from many lenders. 
  • Save more for a down payment. Depending on which type of mortgage you want, you may need between 0% and 20% for a down payment. A higher down payment ups the likelihood that you’ll get a better interest rate from your lender. 
  • Lower your debt-to-income ratio. Your DTI ratio is the amount you pay toward debts each month, divided by your gross monthly income. Many lenders want to see a DTI ratio of 36% or less, and an even better ratio can result in a lower rate. To improve your ratio, pay down debts or seek ways to increase your income. 

Today might be a good time to get a mortgage or refinance and secure a low rate, but there’s no need to rush if you don’t feel fully prepared. 

Ryan Wangman is a reviews fellow at Personal Finance Insider reporting on mortgages, refinancing, bank accounts, and bank reviews. In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership.

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