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Today’s mortgage rates for May 7, 2021: Rates slip – CNET

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Some closely followed mortgage rates declined today. Fifteen-year fixed and 30-year fixed mortgage rates both dwindled. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also slid lower. Although mortgage rates are always moving, they are at a historic low. Because of this, right now is an excellent time for prospective homebuyers to secure a fixed rate. But as always, make sure to think about your personal goals and circumstances before purchasing a house, and shop around to find a lender who can best meet your needs.

Take a look at mortgage rates for different types of loan

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 3.07%, which is a decline of 4 basis points as seven days ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one — but typically a higher interest rate. 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 2.35%, which is a decrease of 4 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. 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 adjustable-rate mortgage has an average rate of 3.09%, a downtick of 4 basis points compared to last week. You’ll usually get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. But since the rate shifts with the market rate, you might end up paying more after that time, as described in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage might make sense for you. If not, changes in the market might significantly increase your interest rate.

Mortgage rate trends

We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the country:

Current average mortgage interest rates

Loan type Interest rate A week ago Change
30-year fixed rate 3.07% 3.11% -0.04
15-year fixed rate 2.35% 2.39% -0.04
30-year jumbo mortgage rate 3.19% 3.26% -0.07
30-year mortgage refinance rate 3.12% 3.17% -0.05

Updated on May 7, 2021.

How to find personalized mortgage rates

When you are ready to apply for a loan, you can connect with a local mortgage broker or search online. When shopping around for home mortgage rates, take into account your goals and current finances. Things that affect what the interest rate you might get on your mortgage include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Having a good credit score, a higher down payment, a low DTI, a low LTV, or any combination of those factors can help you get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider other factors such as fees, closing costs, taxes and discount points. You should comparison shop with multiple lenders — including credit unions and online lenders in addition to local and national banks — in order to get a mortgage loan that’s best for you.

What’s the best loan term?

When picking a mortgage, it’s important to consider the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Another important distinction is between fixed-rate 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 stable for a certain amount of time (most frequently five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate. 

One factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on staying 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 compared to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to 10 years, however, an adjustable-rate mortgage could give you a better deal. There is no “best” loan term as a general rule; it all depends on your goals and your current financial situation. Be sure to do your research and know what you want when choosing a mortgage.

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