Today's best mortgage and refinance rates: Thursday, November 19, 2020

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Mortgage rates have gone up since last Thursday, but refinance rates have gone down.

Both mortgage and refinance rates are low overall. These days, you'll probably get a better deal with a fixed-rate mortgage than an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Business Insider that adjustable-rate mortgages are becoming less beneficial for borrowers. ARM rates are starting higher than fixed-rate mortgages, and you'd risk your rate increasing down the road. It's probably better to lock in a historically low interest rate now with a fixed-rate loan.

If your finances are in a good place, it could be a good time to get a fixed-rate mortgage or refinance.

The best mortgage rates Thursday, November 19, 2020

Mortgage typeAverage rate todayAverage rate last weekAverage rate last month
30-year fixed2.84%2.78%2.81%
15-year fixed2.34%2.32%2.35%
5/1 ARM3.11%2.89%2.90%

Rates from the Federal Reserve Bank of St. Louis.

Mortgage rates have increased since last Thursday. Since this time last month, 30-year fixed rates and 5/1 ARM rates have gone up, and 15-year fixed rates have gone down by one basis point.

Mortgage rates are still low in general. The trend downward becomes more apparent when you look at rates from 6 months and a year ago:

Mortgage typeAverage rate todayAverage rate 6 months agoAverage rate 1 year ago
30-year fixed2.84%3.28%3.75%
15-year fixed2.34%2.72%3.20%
5/1 ARM3.11%3.18%3.44%

Rates from the Federal Reserve Bank of St. Louis.

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

The best refinance rates Thursday, November 19, 2020

Mortgage typeAverage rate todayAverage rate last weekAverage rate last month
30-year fixed3.03%3.16%3.16%
15-year fixed2.56%2.58%2.62%
10-year fixed2.57%2.59%2.63%

Rates from Bankrate.

Refinance rates have decreased across the board since last Thursday, and they're lower than they were this time last month. 

30-year fixed rates

A 30-year fixed mortgage comes with a higher interest rate than fixed-rate loans with shorter terms. For a long time, 30-year fixed rates were higher than adjustable rates. But right now, 30-year fixed rates the better deal.

Your monthly payments will be lower for a 30-year term than for a shorter term, because you're spreading payments out over a longer period of time.

You'll pay more in interest with a 30-year term than you would for a 15-year mortgage, because a) the rate is higher, and b) you'll be paying interest for longer.

15-year fixed rates

The 15-year mortgage rates are lower than 30-year mortgage rates. Between the lower rates and paying off the loan in half the time, you'll pay less in the long run on a 15-year mortgage than on a longer term.

However, your monthly payments will be higher on a 15-year loan than on a 30-year loan. You're paying off the same principal amount in a shorter amount of time, so you'll pay more each month.

10-year fixed rates

A 10-year term isn't very common for an initial mortgage. Some lenders do offer 10-year mortgages, but it's more likely you'll refinance into a 10-year term.

Lenders charge similar interest rates on 10-year and 15-year fixed-rate mortgages, but you'll pay off your home earlier with a 10-year mortgage.

5/1 adjustable rates

An adjustable-rate mortgage, commonly referred to as an ARM, locks in your rate for the first few years, then changes it periodically. A 5/1 ARM keeps your interest rate the same for the first five years, then your rate will increase or decrease once per year.

ARM rates are relatively low right now, but fixed-rate mortgages are still the better deal. The 30-year fixed rates are lower than ARM rates, so it may be a good idea to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate going up later with an ARM.

If you're considering an ARM, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.

Is may be a good time to buy a home or refinance

Refinance rates are low right now, so you may want to consider refinancing in the next few weeks. Starting December 1, most borrowers will pay a 0.5% fee for refinancing. If you lock in a rate before December 1, you won't have to pay this new fee.

But if your finances could use some work, you still might want to hold off on refinancing. A low credit score or a high debt-to-income ratio will result in a higher interest rate, which could cost you more than the 0.5% closing fee over the years.

Whether you want to refinance or get an original mortgage, a fixed-rate mortgage is probably the best deal. Fixed rates are at all-time lows right now. English doesn't recommend applying for an ARM, though.

"I can't see one good reason why someone would choose to go with an ARM versus a 30-year fixed rate in today's market," English said. "Why take the risk when you can get a better rate in a 30-year loan?"

You may not need to hurry to get a new mortgage, though. Mortgage rates will likely stay low well into 2021, if not longer. If you want to land the best rate possible, think about taking some of the following steps before submitting an application:

  • Increase your credit score. A score of at least 700 will help you out — but the higher your score, the lower your interest rate. The most important factor in boosting your credit score is making all your payments on time. 
  • Save more for a down payment. You may be able to place as little as 3% down on a conventional mortgage. But lenders reward larger down payments with better rates, so you may want to save even more. Because rates should stay low for a while, you probably have time to save more for a down payment.
  • Lower your debt-to-income ratio. Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. Most lenders want to see a DTI of 36% or less, but a lower ratio can result in a better rate. To improve your DTI, look for chances to increase your income or pay down debts.

If you feel comfortable with your financial situation, now could be a good time to get a fixed-rate mortgage or refinance.

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