Today’s best mortgage and refinance rates: Tuesday, September 15, 2020

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Fixed mortgage rates have been steadily decreasing, while adjustable rates have increased in recent weeks. Refinance rates have gone down across the board since this time last week and last month.

“Normally there’s an advantage to a 5/1 ARM,” Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Business Insider about an adjustable rate mortgage, in which the rate fluctuates after an initial period. “There’s a reward, like a lower rate.”

However, he points out that the 30-year and 15-year fixed rates are currently offering better rates than the 5/1 adjustable rate mortgage, “and it’s because lenders would much rather see you at their institution for a very long period of time.”

This could be a good time to get a fixed-rate mortgage or refinance, but you may want to reconsider getting an adjustable-rate mortgage.

The best mortgage rates Tuesday, September 15, 2020

Mortgage type
Average rate today
Average rate last week
Average rate last month

30-year fixed
2.86%
2.93%
2.96%

15-year fixed
2.37%
2.42%
2.46%

5/1 ARM
3.11%
2.93%
2.90%

Rates from the Federal Reserve Bank of St. Louis.

The 30-year and 15-year fixed rates have gone down since this time last week and last month. The 5/1 adjustable rates have been steadily increasing, though.

Fixed mortgage rates are at historic lows. Adjustable rates are still low overall, but they’ve started trending upward recently. The trends become more apparent when you look at rates from 6 months and a year ago:

Mortgage type
Average rate today
Average rate 6 months ago
Average rate 1 year ago

30-year fixed
2.86%
3.36%
3.56%

15-year fixed
2.37%
2.77%
3.09%

5/1 ARM
3.11%
3.01%
3.36%

Rates from the Federal Reserve Bank of St. Louis.

Several factors affect mortgage rates. Decreasing rates are usually a sign of a struggling economy. As the coronavirus pandemic and economic crisis continue, rates will likely stay relatively low.

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The best refinance rates Tuesday, September 15, 2020

Mortgage type
Average rate today
Average rate last week
Average rate last month

30-year fixed
3.07%
3.14%
3.41%

15-year fixed
2.53%
2.54%
2.81%

10-year fixed
2.59%
2.62%
2.88%

Rates from Bankrate.

The 30-year and 10-year fixed rates have gone down a little since last Tuesday, while 15-year fixed rates have remained steady. Refinance rates are down across the board since this time last month.

How do 30-year fixed rates work?

You’ll pay a higher rate on a 30-year fixed-rate mortgage than on shorter-term loans with fixed rates. Normally you’d also pay more for a 30-year fixed mortgage than for an adjustable-rate mortgage, but currently, a 30-year fixed mortgage is more affordable than a 5/1 ARM.

Your monthly payments will be lower compared to the other types of loans, because your principal is spread out over a longer period of time.

The downside is that you’ll pay more in interest than you would with a 15-year fixed term because a) the rate is higher, and b) your interest is also spread out over a longer period of time.

How do 15-year fixed rates work?

A 15-year fixed rate is lower than what you’ll pay for a 30-year mortgage. Monthly payments will likely be higher, because you’re paying off the principal in half the time.

You’ll save money in the long run, though, because the rate is lower, and you’ll be …read more

Source:: Business Insider

      

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