Today's best mortgage and refinance rates: Monday, November 9, 2020

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Mortgage rates have fluctuated since last Monday, but not drastically. The 30-year and 15-year refinance mortgage rates have gone down, while 10-year refinance rates have held steady.

Both mortgage and refinance rates are low overall right now. You may be able to lock in a low rate if you get a mortgage or refinance soon. But you'll probably want to get a fixed-rate mortgage, not an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Business Insider that adjustable-rate mortgages are becoming less advantageous 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, consider refinancing or getting a fixed-rate mortgage soon.

The best mortgage rates Monday, November 9, 2020

Mortgage typeAverage rate todayAverage rate last weekAverage rate last month
30-year fixed2.78%2.81%2.87%
15-year fixed2.32%2.32%2.37%
5/1 ARM2.89%2.88%2.89%

Rates from the Federal Reserve Bank of St. Louis.

Mortgage rates have shifted slightly since last Monday. The 30-year fixed rates have decreased, 15-year fixed rates have held steady, and 5/1 adjustable rates have increased. Fixed rates have gone down since this time last month, while ARM rates have balanced out.

Mortgage rates are low overall. The trend downward becomes more obvious 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 fixed2.78%3.26%3.69%
15-year fixed2.32%2.73%3.13%
5/1 ARM2.89%3.17%3.39%

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.

The best refinance rates Monday, November 9, 2020

Mortgage typeAverage rate todayAverage rate last weekAverage rate last month
30-year fixed3.07%3.12%3.13%
15-year fixed2.71%2.73%2.60%
10-year fixed2.58%2.58%2.63%

Rates from Bankrate.

The 30-year and 15-year refinance rates have decreased since last Monday, while 10-year refinance rates have remained steady. Since this time last month, 30-year and 10-year refinance rates have gone down, and 15-year refinance rates have gone up.

How 30-year fixed rates work

A 30-year fixed mortgage comes with a higher interest rate than a shorter-term fixed-rate mortgage. The 30-year fixed rates used to be higher than adjustable rates, but 30-year terms have become the better deal recently.

Your monthly payments on a 30-year term will be lower than on a shorter-term mortgage. You're spreading payments out over a longer period of time, so you'll pay less each month.

You'll pay more in interest in the long term 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.

How 15-year fixed rates work

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.

How 10-year fixed rates work

A 10-year term isn't super common for initial mortgages, but you might refinance into a 10-year mortgage.

The 10-year refinance rates are similar to 15-year rates, but you'll pay off your mortgage earlier.

How 5/1 ARMs work

With an adjustable-rate loan, your rate stays the same for the first few years, then changes periodically. Your rate is locked in for the first five years on a 5/1 ARM, then your rate increases or decreases once per year.

ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. The 30-year fixed rates are comparable to or lower than ARM rates. It could be in your best interest to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate increasing 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.

It may be a good time to get a mortgage or refinance

If your finances are in a good place, you may want to consider refinancing sooner rather than later. 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 closing fee.

But you still may want to consider waiting to refinance if your finances aren't very strong. A low credit score or a high debt-to-income ratio will result in a higher interest rate, which could cost you more in the long run than the new refinancing fee would.

Whether you want to get an initial mortgage or refinance, it could be a good idea to get a fixed-rate loan. Fixed rates are at historic 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 don't necessarily need to hurry to apply for a new mortgage, though. Mortgage rates will likely stay low well into 2021, if not longer. If you want to land the lowest rate, 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 loan. But lenders reward higher down payments with lower 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 an even lower ratio can result in a better rate. To improve your DTI, pay down debts or look for opportunities to increase your income.

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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