Today's mortgage and refinance rates: February 19, 2021 | Rates soar

Since last Friday, mortgage and refinance rates have swelled considerably. However, they are still at all-time lows in general. 

If you’re prepared to buy a home or refinance, you should probably consider a fixed-rate mortgage instead of an adjustable-rate mortgage.

Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Insider ARMs had sometimes been a better deal than fixed-rate mortgages in the past. But he said you could currently secure a lower rate with a fixed term without chancing a future ARM rate increase.

You may want to lock in a low rate while you can.

Mortgage rates for Friday, February 19, 2021

Rates from Money.com

Since last Friday, mortgage rates have gone up substantially, with 7/1 ARM rates making the most significant jump at 57 basis points. Compared to the previous month, rates have also increased moderately. Rates are still at historic lows overall, though.

We’re showing you the average rates nationwide for conventional mortgages, which may be what you consider “normal mortgages.” You may get a lower rate with a government-backed mortgage through the FHA, VA, or USDA.

Mortgage rates are still at striking lows in general. Low rates often are an indicator of an economy in disarray. As the US continues to bear the brunt of the economic fallout of the COVID-19 pandemic, mortgage rates will likely remain low. 

Refinance rates for Friday, February 19, 2021

Rates from Money.com

Refinance rates on all mortgages have ticked up since last Friday, and since last month.

Best ways to get a low mortgage rate

Both fixed and adjustable mortgage rates have risen since last week — though they remain at all-time lows. It may be an excellent day to lock in a low mortgage rate. 

However, there’s no need to apply for a mortgage or refinance speedily. Rates will likely stay low for the coming months, if not years, so you have time to boost your financial profile and better your rate. Here are a few ways you can get the lowest possible rate: 

• Increase your credit score by making timely payments, paying off your debts, or allowing your credit to age. You may consider requesting and reviewing a copy of your credit report to search for any errors that may be lowering your score. 
• Save more for a down payment. The minimum amount of money needed for your down payment will depend on which type of mortgage you want to receive. You have a better chance of scoring an improved interest rate from your lender with a higher down payment.
• 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 better your ratio, pay down debts or look for opportunities to boost your income. 

You can lock in a low rate now if your finances are in good shape, but you don’t need to rush to get a mortgage or refinance if you’re not prepared.  

15-year fixed mortgage rates

With a 15-year fixed mortgage, you’ll pay off your loan over 15 years, and your interest rate will remain the same the entire time.

A 15-year term is less expensive than a 30-year term. You’ll pay a lower interest rate and will pay down your mortgage in half of the time. 

On the flip side, you’ll cough up higher monthly payments with a 15-year fixed mortgage than with a longer term. You’ll pay off the same mortgage principal in half of the time. 

30-year fixed mortgage rates

If you get a 30-year fixed mortgage, you’ll pay down your mortgage over three decades, and you’ll pay a constant interest rate for the whole term. 

You’ll pay more in interest overall with a 30-year fixed mortgage than a 15-year term because you’re paying a higher interest rate for an extended period. 

However, you’ll have smaller monthly payments with a 30-year term than a shorter term because you’re dividing up your payments over more years. 

Adjustable mortgage rates

While a fixed-rate mortgage secures in your rate for the lifetime of your loan, with an adjustable-rate mortgage, you’ll pay the same rate for the first several years, then that rate will change periodically. A 7/1 ARM secures your rate for seven years. Then your rate will fluctuate once per year. 

You may still want a fixed-rate mortgage, although ARM rates are at striking lows. You can lock in a low rate for 15 or 30 years without chancing an increased future rate with an ARM.

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

While you can secure a low rate today, make sure your finances are in order before moving forward.

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 Thursday, February 18 »

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