Today's mortgage and refinance rates: February 21, 2021 | Rates increase

Mortgage and refinance rates have gone up moderately since last Sunday, though they remain at all-time lows in general.

If you’re ready to get a home or refinance, you may want a fixed-rate mortgage instead of an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Insider ARMs were occasionally better deals than fixed-rate mortgages in the past.

Now, he said you could lock in a lower rate with a fixed-rate mortgage without risking an ARM rate increase in the future. You might consider securing a low rate while you can.

Today’s mortgage rates: Sunday, February 21, 2021

Rates from Money.com

Since last Sunday, mortgage rates have ticked up, with 7/1 ARM rates seeing the smallest increase — five basis points. Rates have also gone up compared to last month, though only slightly. Still, rates remain at all-time lows. 

We’re displaying the average rates nationwide for conventional mortgages, which may be what you consider “normal mortgages.” Government-backed mortgage through the FHA, VA, or USDA may offer you a better rate, provided you are eligible. 

Overall, mortgage rates are still at staggering lows. Low rates are often a signal of a struggling economy. As the US continues to face the economic fallout of the COVID-19 pandemic, mortgage rates will likely stay low. 

Today’s refinance rates: Sunday, February 21, 2021

Rates from Money.com

Refinance rates on all mortgages have increased since last week, and all but 7/1 ARM rates have also increased compared to the previous month. 

How to get a low mortgage rate

It might be an excellent time to lock in a low mortgage rate, even though both fixed and adjustable mortgage rates have risen since last week. All rates remain at historic lows. 

You don’t need to rush into applying for a mortgage or refinancing, though, as rates will likely stay low well into 2021, if not longer. You have ample opportunity to better your rate by boosting your financial profile. If you’re looking to get the lowest possible rate, take a look at these tips:  

• Increase your credit score. You can start by making timely payments, paying off your debts, or allowing your credit to age. You’ll get a better interest rate with a higher score, and many lenders will lower your rate with a score of at least 700. 
• Save more for a down payment. The minimum amount you need for your down payment will depend on the type of mortgage you want. The bigger your down payment, the more likely your lender is to offer a better interest rate.
• Lower your debt-to-income ratio. Your DTI ratio is the amount you pay toward debts each month, divided by your gross monthly income. Many lenders want to see a DTI ratio of 36% or less. To improve your ratio, pay down debts or seek ways to increase your income. 

If you’re financially ready, you can secure a great rate — but there’s no need to hurry. 

How 15-year fixed mortgage rates work

If you get a 15-year fixed mortgage, you’ll pay down your mortgage over 15 years, and your interest rate will be constant the whole term.

A 15-year fixed mortgage will cost less overall than a 30-year term. You’ll get a lower interest rate and you’ll pay off the mortgage in half the time.

However, your monthly payments will be higher with a 15-year term than with a 30-year term. You’ll pay off the same mortgage principal in half of the time. 

How 30-year fixed mortgage rates work

If you take out a 30-year fixed mortgage, it will take you three decades to pay off your mortgage, and you’ll pay a steady interest rate for the life of the loan. 

You’ll cough up less per month with a 30-year fixed mortgage than a shorter term because you’re dividing up your payments over more years.

However, you’ll pay a higher amount of total interest with a 30-year term than a 15-year term because you’re paying a higher interest rate for an extended period. 

How ARMs work

With an adjustable-rate mortgage, your rate will stay the same for a set time and change regularly after the introductory period. A 7/1 ARM locks in your rate for seven years, then your rate will increase or decrease annually.

Although ARM rates are relatively low now, you still might want to snag a fixed-rate mortgage. The 30-year fixed rates are equivalent to or lower than ARM rates, so it could be the right time to secure a low rate with a fixed mortgage. This way, you won’t need to worry about your rate going up in the future with an ARM.

If you’re considering getting an ARM, find out from your lender what your rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.

While you can lock in a low rate now, you should be financially prepared before doing so. 

Ryan Wangman is a reviews fellow at Personal Finance Insider reporting on mortgages, refinancing, bank accounts, and bank reviews. In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership.

Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.

See the mortgage rates for Saturday, February 20 »

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