Mortgage rates are in a bit of a tailspin today. The average 30-year fixed mortgage rate fell four basis points, according to Zillow 6.09%. Meanwhile, the 15-year term is seven basis points higher 5.44%.
Here are current mortgage rates according to the latest data from Zillow:
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30 years established: 6.09%
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20 years established: 5.75%
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15 years fixed: 5.44%
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5/1 ARM: 6.22%
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7/1 ARM: 6.53%
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30 years VA: 5.58%
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15-year VA: 5.01%
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5/1 VA: 5.48%
Note that these are national averages and rounded to the nearest hundredth.
Discover 8 strategies for getting the lowest mortgage rates.
These are today’s mortgage refinance rates, according to the latest data from Zillow:
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30 years established: 6.24%
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20 years established: 5.84%
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15 years fixed: 5.64%
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5/1 ARM: 6.47%
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7/1 ARM: 6.62%
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30 years VA: 5.72%
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15-year VA: 5.55%
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5/1 VA: 5.54%
Again, the figures given are national averages, rounded to the nearest hundredth. Mortgage refinance rates are often higher than home buying rates, although this is not always the case.
Use the mortgage calculator below to see how today’s interest rates would affect your monthly mortgage payments.
To dig deeper, you can use Yahoo’s free mortgage calculator to see how homeowners insurance and property taxes factor into your estimated monthly payment. You even have the option to enter Private Mortgage Insurance (PMI) and Home Owners Association fees if they apply to you. This information results in a more accurate monthly payment estimate than if you simply calculated the mortgage principal and interest.
There are two main advantages to a 30-year fixed mortgage: your payments are lower and your monthly payments are predictable.
A 30-year fixed-rate mortgage has relatively low monthly payments because you’re spreading your repayments over a longer period of time than, say, a 15-year mortgage. Your payments are predictable because, unlike an adjustable-rate mortgage (ARM), your interest rate won’t change from year to year. Most years, the only things that can affect your monthly payment are any changes to your homeowner’s insurance or property taxes.
The main disadvantage of a 30-year fixed rate mortgage is the mortgage interest, both short-term and long-term.
A 30-year fixed term has a higher rate than a shorter fixed term, and is higher than the 30-year ARM introductory rate. The higher your rate, the higher your monthly payment. With a higher interest rate and longer term, you’ll also pay a lot more interest over the life of the loan.
The advantages and disadvantages of 15-year fixed mortgage rates are essentially replaced by 30-year interest rates. Yes, your monthly payments will still be predictable, but another benefit is that shorter terms come with lower interest rates. Not only that, but you’ll pay off your mortgage 15 years earlier. So you’ll save hundreds of thousands of dollars in interest over the life of the loan.
However, since you pay the same amount in half the time, your monthly payments will be higher than if you chose a 30-year term.
An adjustable rate mortgage locks in your interest rate for a predetermined amount of time, then changes it periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years and increases or decreases annually for the remaining 25 years.
The main advantage is that the introductory interest rate is usually lower than the 30-year fixed rate, so your monthly payments will be lower. (However, current average interest rates don’t necessarily reflect this—in some cases, fixed rates are actually lower. Check with your lender before deciding between a fixed or adjustable rate.)
With an ARM, you have no idea what mortgage rates will be after the prime rate period is over, so you run the risk of a rate increase later on. It can cost more in the end, and your monthly payments are unpredictable each year.
However, if you plan to move before the introductory rate period ends, you can take advantage of the low rate without risking a rate increase.
First of all, now is a relatively favorable time to buy a home compared to a couple of years ago. Home prices are not rising as they were during the height of the COVID-19 pandemic. So if you want or need to buy a home in the near future, you should feel pretty good about the current housing market.
Interest rates have been falling for a couple of weeks, and the rate on a 30-year conventional loan is lower than it has been in more than a year.
The best time to buy is usually when it suits your stage of life. Trying to time the property market can be as futile as timing the stock market – buy when the time is right for you.
According to Zillow, the national average 30-year mortgage rate is currently 6.09%. But keep in mind that mortgage interest rates vary by state and even by zip code. For example, if you are buying in a city where living is expensive, prices may be higher.
Economists do not expect mortgage interest rates to drop significantly by the end of the year. They might fall here or there, but they probably won’t.
In general, mortgage rates have gradually declined. Since the beginning of July, the 30-year fixed rate has fallen by more than half a point.
In many ways, securing a low mortgage refinance rate is similar to when you bought a home. Try to improve your credit score and lower your debt-to-income ratio (DTI). Refinancing to a shorter term will also give you a lower interest rate, although your monthly mortgage payments will be higher.