Today's best mortgage and refinance rates: Sunday, November 29, 2020

Today's best mortgage and refinance rates: Sunday, November 29, 2020

November 29, 2020

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Mortgage rates have held steady since last Sunday. Refinance rates have increased, but not by much — rates are still relatively low, and it could still be a good idea to refinance soon.

Rates are at all-time lows overall. Whether you want a new mortgage or to refinance your home, you'll probably want to get a fixed-rate mortgage rather than an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Business Insider that adjustable-rate mortgages are less advantageous for borrowers than they used to be. 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 Sunday, November 29, 2020

Mortgage typeAverage rate todayAverage rate last weekAverage rate last month
30-year fixed2.72%2.72%2.81%
15-year fixed2.28%2.28%2.32%
5/1 ARM2.85%2.85%2.88%

Rates from the Federal Reserve Bank of St. Louis.

Mortgage rates haven't changed since last Sunday, but they've decreased since this time last month.

Mortgage rates are at historic lows overall. The gradual decrease 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 fixed2.72%3.15%3.68%
15-year fixed2.28%2.62%3.15%
5/1 ARM2.85%3.13%3.43%

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 Sunday, November 29, 2020

Mortgage typeAverage rate todayAverage rate last weekAverage rate last month
30-year fixed3.04%3.00%3.11%
15-year fixed2.66%2.54%2.65%
10-year fixed2.59%2.56%2.61%

Rates from Bankrate.

Refinance rates have gone up since last Sunday, although not significantly. Since this time last month, 30-year and 10-year refinance rates have decreased, and 15-year refinance rates have increased. These rates were last updated on Friday, November 27.

30-year fixed rates

You'll pay a higher interest rate on a 30-year fixed mortgage than on 15-year or 10-year fixed-rate mortgages. For a long time, you'd also pay a higher rate on a 30-year fixed loan than on a 5/1 ARM. But right now, 30-year fixed rates the better deal.

Monthly payments are lower for 30-year terms than for shorter terms, because you're spreading payments out over a longer period of time.

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

15-year fixed rates

The 15-year fixed-rate mortgages are more affordable than 30-year terms in the long run. You'll pay a lower interest rate on a 15-year term, and you'll pay off the mortgage in half the time.

Your monthly payments will be higher for a 15-year mortgage than for a 30-year mortgage, though. You're paying off the same loan principal in a shorter amount of time, so you'll pay more every month.

10-year fixed rates

Many lenders offer similar rates on 10-year mortgages and 15-year mortgages, but you'll pay off your mortgage five years earlier.

You might refinance into a 10-year mortgage, but a 10-year term isn't super common for an initial mortgage.

5/1 adjustable rates

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

Although ARM rates are relatively low these days, you still may want to go with a fixed-rate mortgage. The 30-year fixed rates are comparable to or lower than ARM rates, so it could be good to lock in a low rate with a fixed 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.

It could be a good day 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. You can avoid paying this fee by locking in a rate before December 1.

But you still might be better off waiting to refinance if your finances need a boost. 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% fee in the long run.

Whether you want to get an initial mortgage or refinance, it could be a good time to get a fixed-rate mortgage. Fixed rates are at all-time lows right now. English doesn't recommend applying for an adjustable-rate mortgage, 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 rush to apply for a new mortgage. Rates will likely stay low well into 2021, if not longer. If you want to land the lowest rate, consider taking some of the following steps before submitting an application:

  • Increase your credit score by making payments on time, paying down debt, and letting your credit age. A score of at least 700 will help you out — but the higher your score, the lower your interest rate.
  • Save more for a down payment. With a conventional loan, you may be able to put down as little as 3%. But the higher your down payment, the lower your rate will likely be. Because rates should stay low for a while, you probably have time to save more.
  • 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 DTI 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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