Mortgage rates fell again today. The average 30-year fixed rate fell five basis points, according to Zillow 6.10%. The 15-year fixed loan fell six basis points to 5.42%.
Here are current mortgage rates according to the latest data from Zillow:
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30 years established: 6.10%
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20 years established: 5.56%
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15 years fixed: 5.42%
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5/1 ARM: 6.28%
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7/1 ARM: 6.44%
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30 years VA: 5.53%
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15-year VA: 5.20%
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5/1 VA: 5.64%
Note that these are national averages and rounded to the nearest hundredth.
Learn how mortgage rates are determined.
These are today’s mortgage refinance rates, according to the latest data from Zillow:
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30 years established: 6.26%
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20 years established: 5.89%
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15 years fixed: 5.68%
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5/1 ARM: 6.50%
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7/1 ARM: 6.70%
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30 years VA: 5.82%
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15-year VA: 5.69%
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5/1 VA: 5.44%
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 different interest rates and loan amounts will affect your monthly payments. It also shows how the term length reacts to things.
For a deeper dive, use Yahoo Finance’s mortgage calculator, which includes homeowner’s insurance and property taxes in your monthly payment estimate. 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 term loan is higher than a shorter term loan. 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 changed 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 reflect this—fixed rates are actually lower, according to Zillow. 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.
According to Zillow, the national average 30-year mortgage rate is currently 6.10%. However, keep in mind that averages may vary depending on where you live. For example, if you are buying in a city where living is expensive, prices may be even higher.
Mortgage rates are likely to remain tight for the next few months. The Federal Reserve is expected to cut short-term interest rates again next week; however, mortgage rates can resist a sharp decline.
Mortgage rates have fluctuated, but have generally declined since the government shutdown. They are slightly lower than they were a year ago, according to data from Freddie Mac.
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.