Mortgage rates are so close to dropping below 6%. According to Zillow, the average 30-year fixed rate is down two basis points to 6.04%. A fractional one-day move lower and we will be in sub-6% territory, a move that is likely to trigger a wave of purchase and refinance applications. The 15-year fixed home loan fell to six basis points 5.47%.
Here are the current mortgage rates, according to the latest Zillow data:
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30 years fixed: 6.04%
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20 years fixed: 5.84%
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15 years fixed: 5.47%
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5/1 ARM: 6.16%
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7/1 ARM: 6.12%
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30 year old VA: 5.36%
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15 year old VA: 4.96%
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5/1 VA: 4.91%
Remember, these are national averages and rounded to the nearest hundred.
Learn about how mortgage rates are determined.
Here are today’s mortgage refinance rates, according to the latest Zillow data:
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30 years fixed: 6.18%
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20 years fixed: 6.11%
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15 years fixed: 5.66%
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5/1 ARM: 6.47%
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7/1 ARM: 6.64%
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30 year old VA: 5.49%
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15 year old VA: 5.15%
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5/1 VA: 5.02%
Again, the numbers provided are national averages rounded to the nearest hundred. Mortgage refinancing rates are often higher than home buying rates, although this is not always the case.
Use the mortgage calculator below to see how various interest rates and loan amounts will affect your monthly payments. It also shows how the length of the term plays into things.
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You can bookmark the Yahoo Finance mortgage payment calculator and keep it handy for future use, as you shop for homes and lenders. You even have the option of factoring in the costs for private mortgage insurance (PMI) and homeowner’s association dues if those apply to you. These details result in a more accurate monthly payment estimate than if you simply calculated your 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 rate will not change from year to year. Most years, the only things that can affect your monthly payment are any changes in your homeowners insurance or property taxes.
The main disadvantage of 30 year fixed rate mortgages is the mortgage interest, both short term and long term.
A 30 year fixed term loan comes at a higher rate than a shorter fixed term loan. You will also have to pay a lot more in interest over the life of your loan because of both the higher rate and the duration.
The pros and cons of 15-year fixed mortgage rates are essentially interchanged with those of 30-year rates. Yes, your monthly payments will still be predictable, but another advantage is that shorter terms come with lower interest rates. Not to mention, you pay off your mortgage 15 years earlier. So you’ll potentially save hundreds of thousands of dollars in interest over the course of your loan.
However, because you are paying the same amount halfway through the term, your monthly payments will be higher than if you chose a 30-year term.
Adjustable rate mortgages lock in your rate for a predetermined amount of time, then change it periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years and then goes up or down once a year for the remaining 25 years.
The main advantage is that the starting rate is usually lower than what you would get with a 30-year fixed rate, so your monthly payments will be lower. (Actual average rates don’t reflect this, though — fixed rates are actually lower, according to Zillow data. Talk to your lender before deciding between a fixed or adjustable rate.)
With an ARM, you have no idea what mortgage rates will be once the intro-rate period is over, so you run the risk of your rate going up later. This can ultimately end up costing more, and your monthly payments are unpredictable from year to year.
But if you plan to move before the intro-rate period ends, you can reap the benefits of a low rate without risking a rate hike down the road.
The national average 30-year mortgage rate is currently 6.04%, according to Zillow. But keep in mind that averages may vary depending on where you live. For example, if you are buying in a city with a high cost of living, rates can be even higher.
Mortgage rates are likely to remain in a tight range over the next few months. The Federal Reserve stated that another reduction in the interest rate in December is not a certainty; however, even if it occurs, mortgage rates are likely to resist moving drastically lower.
Mortgage rates have been fluctuating – but there has been an overall lower move over the past few months. According to Freddie Mac data, they are below where they were a year ago.
In many ways, securing a low rate mortgage refinance is similar to when you bought your home. Try to improve your credit score and lower your debt-to-income ratio (DTI). Refinancing into a shorter term will also get you a lower rate, although your monthly mortgage payments will be higher.