Today’s mortgage rates for Aug. 23, 2021: Rates cool off – CNET [CNET]

Some principal mortgage rates sank today. Fifteen-year fixed and 30-year fixed mortgage rates both trailed off. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also sank lower. Mortgage interest rates are never set in stone, but interest rates are at historic lows. Because of this, right now is an ideal time for prospective homebuyers to get a fixed rate. But as always, make sure to first consider your personal goals and circumstances before purchasing a house, and talk to multiple lenders to find a lender who can best meet your needs.

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Here are mortgage rates for different types of loan

30-year fixed-rate mortgages

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 3.01%, which is a decrease of 4 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed mortgage will typically have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 2.31%, which is a decrease of 2 basis points from seven days ago. You’ll definitely have a larger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 3.02%, a fall of 5 basis points compared to last week. With an ARM mortgage, you’ll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. But since the rate changes with the market rate, you could end up paying more after that time, as described in the terms of your loan. Because of this, an ARM might be a good option if you plan to sell or refinance your house before the rate changes. But if that’s not the case, you might be on the hook for a much higher interest rate if the market rates change.

Mortgage rate trends

We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders nationwide:

Today’s mortgage interest rates

Rates accurate as of Aug. 23, 2021.

How to find the best mortgage rates

You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. Make sure to think about your current financial situation and your goals when trying to find a mortgage. Things that affect what mortgage interest rate you might get include: your credit score, down payment, loan-to-value ratio and debt-to-income ratio. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. Besides the interest rate, other costs including closing costs, fees, discount points and taxes might also impact the cost of your house. Make sure you talk to a variety of lenders — including local and national banks, credit unions and online lenders — and comparison-shop to find the best mortgage loan for you.

What is a good loan term?

When picking a mortgage, you should consider the loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. Another important distinction is between fixed- and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are set for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only the same for a certain amount of time (usually five, seven or 10 years). After that, the rate changes annually based on the market interest rate.

When choosing between a fixed- and adjustable-rate mortgage, you should take into consideration the length of time you plan to live in your home. Fixed-rate mortgages might be a better fit if you plan on living in a home for quite some time. Fixed-rate mortgages offer more stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages can sometimes offer lower interest rates upfront. However, you may get a better deal with an adjustable-rate mortgage if you’re only planning to keep your home for a couple years. The best loan term depends on your own situation and goals, so be sure to consider what’s important to you when choosing a mortgage.