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Today’s mortgage and refinance rates: February 27, 2021 | Rates waver

Table of Contents: Masthead StickySummary List PlacementMortgage and refinance rates have fluctuated since last week, though rates are still at significant lows.  If you're prepared to go for a home or refinance, you might prefer a fixed-rate mortgage to an adjustable-rate mortgage. Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Insider...

Mortgage rates today

Table of Contents: Masthead StickySummary List Placement

Mortgage and refinance rates have fluctuated since last week, though rates are still at significant lows. 

If you’re prepared to go for a home or refinance, you might prefer a fixed-rate mortgage to an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Insider ARMs were sometimes better bargains than fixed-rate mortgages in the past.

Now, English said you could secure a lower rate with a fixed-rate mortgage for 15 or 30 years without chancing a future ARM rate increase. You might consider locking in a low rate while possible.

Refinance rates on Saturday, February 27, 2021

Mortgage type Average rate today Average rate last week Average rate last month
15-year fixed 2.89% 2.76% 2.58%
30-year fixed 3.85% 3.68% 3.59%
7/1 ARM 4.63% 4.72% 4.36%
10/1 ARM 4.74% 4.49% 4.4%

Rates from Money.com

Mortgage refinance rates on fixed mortgages and 10/1 ARMs have increased slightly since last week. Rates on 7/1 ARMs have ticked down marginally over the same timeframe.

Refinance rates are still at all-time lows overall. Low rates are often an indicator of a floundering economy. Refinance rates will likely stay low as the US continues to handle the economic fallout of the COVID-19 pandemic.

Mortgage rates on Saturday, February 27, 2021

Mortgage type Average rate today Average rate last week Average rate last month
15-year fixed 2.55% 2.44% 2.31%
30-year fixed 3.41% 3.26% 3.06%
7/1 ARM 4.26% 4.44% 3.96%
10/1 ARM 4.11% 4.12% 3.93%

Rates from Money.com

Since last week, rates on fixed mortgages have gone up, and all rates have increased since last month. However, the rates on adjustable mortgages have gone down, with 7/1 ARM rates decreasing by 18 basis points. Rates remain at all-time lows in general. 

We’re displaying the average rates nationwide for conventional mortgages, which may be what you consider “normal mortgages.” Government-backed mortgages through the FHAVA, or USDA may offer lower rates, provided you’re eligible. 

Best ways to get a low mortgage rate

Fixed and adjustable mortgage rates have wavered since last Saturday — though they are still at striking lows. It may be an excellent day to lock in a low mortgage rate. 

At the same time, you shouldn’t be too concerned about a rate increase anytime shortly, as rates will probably remain low well into 2021, if not longer. There’s no need to rush to get a mortgage or refinance. You have the chance to improve your financial standing and get a better rate. 

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

  • Increase your credit scoreYou can begin by making timely payments, paying off your debts, or allowing your credit to age. You’ll get a more favorable interest rate with a higher score, and many lenders will drop your rate with a score of at least 700. 
  • Save more for a down payment.  The smallest amount you need for your down payment will depend on the type of mortgage you’re trying to get. The bigger your down payment, the more likely your lender will give you a better interest rate.
  • 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. To improve your ratio, pay down debts or look for ways to boost your income. 
  • Choose a federally-backed mortgage. You may want to consider a USDA loan (designed for low-to-moderate income borrowers buying in a rural area), a VA loan (intended for military members and veterans), or an FHA loan (not designated for any particular group). These loans often come with lower interest rates than conventional mortgages. As a bonus, a down payment isn’t needed for USDA or VA loans.

If you’re financially ready, you can secure an excellent rate — but there’s no need to rush. 

How 15-year fixed mortgage rates work

With a 15-year fixed mortgage, you’ll pay off your loan over 15 years, and your interest rate will stay constant the entire period.

You’ll fork over higher monthly payments with a 15-year term than a 30-year term because you’re paying down the same mortgage principal in half the time. 

On the bright side, a 15-year fixed mortgage is less expensive than a 30-year fixed mortgage. It will take you half the time to pay off your mortgage and you’ll get a lower interest rate as well. 

How 30-year fixed mortgage rates work

If you take out a 30-year fixed mortgage, you pay down your mortgage over three decades with the same interest rate the whole time. 

You’ll pay a higher amount of total interest with a 30-year term than a 15-year term because you’re paying a higher interest rate for an extended period. 

However, you’ll cough up less per month with a 30-year fixed mortgage than a shorter term because you’re splitting up your payments over more years.

How ARMs work

An adjustable-rate mortgage, commonly referred to as an ARM, will lock in your rate for a set duration. Then your rate will fluctuate periodically. A 7/1 ARM keeps your rate the same for seven years, then your rate will change once per year. 

Although ARM rates are fairly low now, you still may want to snag a fixed-rate mortgage. The 30-year fixed rates are equivalent to or lower than ARM rates, so it could be the right opportunity to lock in a low rate with a fixed mortgage. This way, you won’t need to worry about your rate going up in the future with an ARM.

If you’re considering getting an ARM, ask your lender what your rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.

While you could secure a low rate now, you should be financially prepared before doing so. 

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.

Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.

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