Today's mortgage and refinance rates: February 18, 2021 | Rates rise

Mortgage and refinance rates have ticked up since last Thursday, but they remain at striking lows. 

You might want to think about getting a fixed-rate mortgage instead of an adjustable-rate mortgage if you’re ready to buy a home or refinance. 

Mat Ishbia, CEO of United Wholesale Mortgage, told Insider that fixed-rate mortgages are currently a better deal than adjustable-rate mortgages.

Adjustable rates start higher than fixed rates right now, and you run the risk of a future rate increase with an ARM. You may want to secure a low rate while you can.

Today’s mortgage rates: Thursday, February 18, 2021

Rates from Money.com

Since last Thursday, mortgage rates have increased. The rates for 7/1 ARMs have changed the most significantly, going up 30 basis points. Rates are still at all-time lows. 

We’re supplying you with the average rates nationwide for conventional mortgages, which may be what you consider “standard mortgages.” Government-backed mortgages through the FHA, VA, or USDA may offer better rates to eligible homebuyers. 

Overall, mortgage rates remain at historic lows. Low rates frequently signal a floundering economy. Mortgage rates will probably stay low as the US continues to handle the economic fallout of the COVID-19 pandemic. 

Today’s mortgage refinance rates: Thursday, February 18, 2021

Rates from Money.com

Refinance rates on all fixed-rate and adjustable-rate mortgages have gone up, with 10/1 ARM rates increasing the most drastically by 24 basis points.

Tips for obtaining a low mortgage rate

Today might be a great chance to lock in a low mortgage rate. Though rates for both fixed and adjustable mortgages have risen since last week, they still are at historic lows. 

Importantly, you don’t have to rush to apply for a mortgage or refinance. Rates will probably remain low well in 2021, if not longer, so you have time to better your finances and get an improved rate. To snag the lowest potential rate, think about these steps before you apply:  

• Increase your credit score. Ensure you make all your payments on time — this is the best way to improve your credit score. You may also consider paying down debts or letting your credit age. 
• Save more for a down payment. The type of mortgage you want will determine the minimum amount required for your down payment. The bigger your down payment, the more likely your lender will give you 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, and a better ratio may result in a lower rate. To improve your ratio, pay down debts or seek chances to increase your income. 

If you’re financially able, you can lock in a low rate now. 

How 15-year fixed mortgage rates work

If you get a 15-year fixed mortgage, you’ll pay a locked-in interest rate over a 15-year loan term. 

You’ll pay less overall with a 15-year term than a 30-year term. You’ll pay off the mortgage 15 years earlier, and you’ll also get a lower interest rate. 

However, you’ll shell out more per month with a 15-year fixed mortgage than a 30-year fixed mortgage. You’ll pay off the same loan principal in half of the time. 

How 30-year fixed mortgage rates work

With a 30-year fixed mortgage, it will take you three decades to pay down your mortgage, and your interest rate will remain the same the whole time. 

Your monthly payments will be smaller with a 30-year fixed mortgage than a shorter term because you’re splitting up your payments over a more extended period. 

In the long run, you’ll pay more in interest with a 30-year term than a 15-year term because you’re paying a higher interest rate for more years.

How ARMs work

An adjustable-rate mortgage, commonly known as an ARM, will lock in your rate for several years. Then your rate will fluctuate regularly. A 10/1 ARM keeps your rate the same for a decade, then your rate will change once per year.

You might still prefer a fixed-rate mortgage, even though ARM rates are at all-time lows. You can lock in a low rate for 15 or 30 years without risking an increased future rate with an ARM.

If you’re thinking about getting an ARM, ask your lender what your rates would be if you chose a fixed-rate versus an adjustable-rate mortgage.

Ensure you have a secure financial situation before getting a mortgage or refinancing. You still have time to rectify your financial portfolio, as rates will likely stay low for a while. 

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 Wednesday, February 17 »

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