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Today’s mortgage and refinance rates: February 23, 2021 | Rates increase

Mortgage and refinance rates have slightly increased since last week, but they remain at all-time lows in general. 

If you’re ready to get a mortgage or refinance, you may want to think about a fixed-rate mortgage instead of an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Insider ARMs used to be a preferable option for some borrowers. However, now you can secure a lower fixed rate for 15 or 30 years, and you won’t chance your ARM rate going up in the future.

You may want to lock in a low rate while you can. 

Rates from Money.com

Since last Tuesday, rates have gone up, with 15 year fixed mortgage rates increasing by 10 basis points. Rates have also increased since last month. All rates are still at all-time lows. 

We’re showing you the average rates nationwide for conventional mortgages, which may be what you consider “normal mortgages.” Government-backed mortgages through the FHAVA, or USDA may give you a better rate if you’re eligible. 

Mortgage rates are still at striking lows. Low rates often signify an economy in disarray. Mortgage rates will likely stay low as the US continues to face the economic impact of the COVID-19 pandemic. 

Rates from Money.com

All mortgage refinance rates have gone up since last week. You can still get a rate below 3% on a 15-year refinance and below 4% on a 30-year refinance.

It might be an excellent opportunity to lock in a low mortgage rate. Though mortgage and refinance rates are up since last Tuesday, you might want to secure a historically low rate today. 

Importantly, there’s no need to rush to apply for a mortgage or refinance if you’re not financially prepared. Rates will likely stay low well into 2021, if not longer, so you have the opportunity to better your rate by improving your financial profile. 

If you want to secure the lowest rate, consider some of the following steps before applying:

  • Increase your credit scoreYou can start by making timely payments on time, paying off debts, or letting your credit age. Requesting and reviewing a copy of your credit report might help you find any mistakes that may be tanking your score. 
  • Save more for a down paymentThe smallest amount required for your down payment will be contigent on the type of mortgage you are after. The larger your down payment, the more probable your lender will offer 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 better your ratio, pay down debts or find ways to boost your income. 

If you’re financially prepared, you can lock in an excellent rate — but there’s no need to hurry. 

If you take out a 15-year fixed mortgage, you’ll pay off your loan in 15 years, and you’ll pay the same interest rate the whole time. 

A 15-year term is less expensive than a longer term. You’ll pay a lower interest rate and will pay down your mortgage in half of the time. 

On the other hand, you’ll cough up larger monthly payments with a 15-year fixed mortgage than with a 30-year fixed mortgage. It will take you half the time to pay off the same mortgage principal.

With a 30-year fixed mortgage, you’ll pay down your mortgage over 30 years, and you’ll pay a locked-in interest rate for the life of your loan. 

You’ll fork over less per month with a 30-year term than a 15-year term because you’re dividing up your payments over more years.  

On the flip side, it will cost you more in interest with a 30-year fixed mortgage than with a shorter term. Your total interest paid will be higher because you’re paying a higher interest rate for an extended period. 

With an adjustable-rate mortgage, your rate will remain constant for a predetermined amount of time and fluctuate periodically after the introductory period. A 7/1 ARM secures your rate for seven years. Then your rate will change annually.

You may prefer a fixed-rate mortgage to an ARM, even though ARM rates are currently at all-time lows. The 30-year fixed rates are equivalent to or lower than ARM rates, so it could be the right time to secure a low rate with a fixed mortgage. Additionally, you won’t risk an ARM rate increase down the line.

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 can lock in a low rate today, you should make sure you are 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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