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Today's best mortgage and refinance rates: Tuesday, January 12, 2021

Published by Business Insider on Tue, 12 Jan 2021


<p><img src="https://static6.businessinsider.com/image/5fbd8cca50e71a001155741b-1667/4x3%20Best%20mortgage%20and%20refinance%20rates%20daily%20green%20text.png" border="0" alt="Mortgage rates today" data-mce-source="Alyssa Powell/Business Insider" data-mce-caption="Below, find the best mortgage rates today."></p><p></p><bi-shortcode id="table-of-contents-sticky" class="mceNonEditable" data-type="h2">Table of Contents: Masthead Sticky</bi-shortcode><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Refinance rates have increased since last Tuesday, and so have adjustable rates on initial mortgages. Fixed rates are down by one or two basis points.</p><p>Even with the slight increases, mortgage rates are at historic lows overall. It could be a good day to lock in a rate. You may want to go with a <a href="https://www.businessinsider.com/personal-finance/fixed-rate-mortgage-vs-adjustable-rate-mortgage" target="_blank" rel="noopener">fixed-rate mortgage</a> rather than an ARM, though.</p><p>Darrin English, Senior Community Development Loan Officer at<a href="https://www.quonticbank.com/" target="_blank" rel="noopener" data-analytics-module="body_link" data-analytics-post-depth="20" data-uri="0a418fea4dd3e75283a84d829956f6dc">Quontic Bank</a>, told Business Insider fixed rates are much more advantageous for borrowers than adjustable rates these days.</p><p>Adjustable rates used to start lower than fixed rates, so they could be good options if you planned to move before your rate increased. However, fixed rates are lower than ARM rates right now. If your finances are solid, it could be a great day to lock in a low rate.</p><div><div class="ca-widget" data-token="p83018dcddd4"></div><script async defer src="https://www.consumersadvocate.org/embeds/embedder.js'v=1"></script></div><h2>The best mortgage rates for Tuesday, January 12, 2021</h2><table style="width: 100%; border-collapse: collapse;" border="1" cellpadding="10px"><tbody><tr><td style="width: 25%;"><strong>Mortgage type</strong></td><td style="width: 25%; text-align: center;"><strong>Average rate today</strong></td><td style="width: 25%; text-align: center;"><strong>Average rate last week</strong></td><td style="width: 25%; text-align: center;"><strong>Average rate last month</strong></td></tr><tr><td style="width: 25%;">30-year fixed</td><td style="width: 25%; text-align: center;">2.65%</td><td style="width: 25%; text-align: center;">2.67%</td><td style="width: 25%; text-align: center;">2.71%</td></tr><tr><td style="width: 25%;">15-year fixed</td><td style="width: 25%; text-align: center;">2.16%</td><td style="width: 25%; text-align: center;">2.17%</td><td style="width: 25%; text-align: center;">2.26%</td></tr><tr><td style="width: 25%;">5/1 ARM</td><td style="width: 25%; text-align: center;">2.75%</td><td style="width: 25%; text-align: center;">2.71%</td><td style="width: 25%; text-align: center;">2.79%</td></tr></tbody></table><p><em>Rates from the <a href="https://fred.stlouisfed.org/categories/114" target="_blank" rel="noopener">Federal Reserve Bank of St. Louis</a>.</em></p><p>Mortgage rates haven't changed much since last Tuesdaythe 30-year fixed rates are down by two basis points, 15-year fixed rates are down by one basis point, and 5/1 adjustable rates are up by four basis points. Mortgage rates have decreased overall since this time last month.</p><p>In general, mortgage rates are at all-time lows. The downward trend becomes more apparent when you look at rates from six months and a year ago.</p><table style="width: 100%; border-collapse: collapse; height: 105px;" border="1" cellpadding="10px"><tbody><tr style="height: 42px;"><td style="width: 25%; height: 42px;"><strong>Mortgage type</strong></td><td style="width: 25%; text-align: center; height: 42px;"><strong>Average rate today</strong></td><td style="width: 25%; text-align: center; height: 42px;"><strong>Average rate 6 months ago</strong></td><td style="width: 25%; text-align: center; height: 42px;"><strong>Average rate 1 year ago</strong></td></tr><tr style="height: 21px;"><td style="width: 25%; height: 21px;">30-year fixed</td><td style="width: 25%; text-align: center; height: 21px;">2.65%</td><td style="width: 25%; text-align: center; height: 21px;">3.03%</td><td style="width: 25%; text-align: center; height: 21px;">3.64%</td></tr><tr style="height: 21px;"><td style="width: 25%; height: 21px;">15-year fixed</td><td style="width: 25%; text-align: center; height: 21px;">2.16%</td><td style="width: 25%; text-align: center; height: 21px;">2.51%</td><td style="width: 25%; text-align: center; height: 21px;">3.07%</td></tr><tr style="height: 21px;"><td style="width: 25%; height: 21px;">5/1 ARM</td><td style="width: 25%; text-align: center; height: 21px;">2.75%</td><td style="width: 25%; text-align: center; height: 21px;">3.02%</td><td style="width: 25%; text-align: center; height: 21px;">3.30%</td></tr></tbody></table><p><em>Rates from the <a href="https://fred.stlouisfed.org/categories/114" target="_blank" rel="noopener">Federal Reserve Bank of St. Louis</a>.</em></p><p>Low rates are typically a sign of a struggling economy. Mortgage rates will probably stay low as the US continues to grapple with the COVID-19 pandemic.</p><h2>The best refinance rates for Tuesday, January 12, 2021</h2><table style="width: 100%; border-collapse: collapse; height: 105px;" border="1" cellpadding="10px"><tbody><tr style="height: 42px;"><td style="width: 25%; height: 42px;"><strong>Mortgage type</strong></td><td style="width: 25%; text-align: center; height: 42px;"><strong>Average rate today</strong></td><td style="width: 25%; text-align: center; height: 42px;"><strong>Average rate last week</strong></td><td style="width: 25%; text-align: center; height: 42px;"><strong>Average rate last month</strong></td></tr><tr style="height: 21px;"><td style="width: 25%; height: 21px;">30-year fixed</td><td style="width: 25%; text-align: center; height: 21px;">2.94%</td><td style="width: 25%; text-align: center; height: 21px;">2.89%</td><td style="width: 25%; text-align: center; height: 21px;">2.94%</td></tr><tr style="height: 21px;"><td style="width: 25%; height: 21px;">15-year fixed</td><td style="width: 25%; text-align: center; height: 21px;">2.39%</td><td style="width: 25%; text-align: center; height: 21px;">2.33%</td><td style="width: 25%; text-align: center; height: 21px;">2.59%</td></tr><tr style="height: 21px;"><td style="width: 25%; height: 21px;">10-year fixed</td><td style="width: 25%; text-align: center; height: 21px;">2.41%</td><td style="width: 25%; text-align: center; height: 21px;">2.36%</td><td style="width: 25%; text-align: center; height: 21px;">2.47%</td></tr></tbody></table><p><em>Rates from <a href="https://www.bankrate.com/mortgages/" target="_blank" rel="noopener nofollow sponsored nofollow sponsored nofollow sponsored">Bankrate</a>.</em></p><p>Refinance rates are up since last Tuesday. The 30-year refinance rates have held steady since this time last month, while 15-year and 10-year refinance rates have decreased.</p><h2>How do 30-year fixed mortgage rates work'</h2><p>A <a href="https://www.businessinsider.com/personal-finance/30-year-mortgage-rates" target="_blank" rel="noopener">30-year fixed-rate mortgage</a> locks in your rate for the entire life of your loan, and you'll pay off the mortgage over 30 years.</p><p>You'll pay a higher interest rate on a30-year fixed mortgagethan 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.</p><p>Monthly payments are lower for 30-year terms than for shorter terms, because you're spreading payments out over a longer period of time.</p><p>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.</p><h2>How do 15-year fixed mortgage rates work'</h2><p>With a <a href="https://www.businessinsider.com/personal-finance/15-year-mortgage-rates" target="_blank" rel="noopener">15-year fixed term</a>, you'll pay down your mortgage over 15 years, and your rate stays the same the entire time.</p><p>You'll pay more each month on a15-year mortgage than on a 30-year mortgage, because you're paying off the same <a href="https://www.businessinsider.com/personal-finance/mortgage-principal" target="_blank" rel="noopener">loan principal</a> in a shorter amount of time.</p><p>But you can save a lot of money on interest with a 15-year mortgage. The 15-year fixed rates are lower than 30-year rates, and you'll pay off the mortgage (and interest) in half the time.</p><h2>How do 10-year fixed mortgage rates work'</h2><p>Some lenders offer 10-year terms on initial mortgages. However, it's more likely that you'd refinance into a 10-year term.</p><p>The 10-year fixed mortgage rates are comparable to 15-year rates, but you'll pay off your loan five years earlier.</p><h2>How do 5/1 ARMs work'</h2><p>With an adjustable-rate loan, your rate stays the same for the first few years, then changes periodically. Your rate is locked in for the first five years on a<a href="https://www.businessinsider.com/personal-finance/5-1-arm-rates" target="_blank" rel="noopener" data-analytics-module="body_link" data-analytics-post-depth="60" data-uri="b8b4d737ce8e8b0e952e77e69d15c4ed">5/1 ARM</a>, then your rate increases or decreases once per year.</p><p>ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. The 30-year fixed rates are comparable to or lower than ARM rates. It could be in your best interest to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate increasing later with an ARM.</p><p><a href="https://www.businessinsider.com/personal-finance/adjustable-rate-mortgage" target="_blank" rel="noopener" data-analytics-module="body_link" data-analytics-post-depth="60" data-uri="8dcce7c2a51260a52cc13a715412c2d0">If you're considering an ARM</a>, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.</p><h2>How to lock in a low mortgage rate</h2><p>It could be a good day to apply for a mortgage if your finances are in a good place. You don't necessarily need to rush, though. Rates will probably stay low for months, if not years. To get the best rate possible, consider taking some of the following steps before submitting an application:</p><ul><li><strong><a href="https://www.businessinsider.com/personal-finance/how-to-increase-your-credit-score-improve-credit" target="_blank" rel="noopener">Increase your credit score</a></strong> by paying down high-interest debt and making payments on time. A score of at least 700 will help you outbut the higher, the better.</li><li><strong>Save more for a down payment.</strong> <a href="https://www.businessinsider.com/personal-finance/20-percent-down-payment-rule-mortgage-homebuying" target="_blank" rel="noopener">You don't necessarily need a 20% down payment</a> to get a good rate, but the more you save, the better your rate will likely be. If you don't have much for a down payment right now, then it could be worth saving for a few more months, since rates are likely to stay low. If you don't have money for a down payment, then you could apply for a USDA or VA loan, if you qualify.</li><li><strong>Lower your debt-to-income ratio.</strong> Your debt-to-income ratio is the amount you pay toward debts each month, divided by your gross monthly income. Lenders want to see a <a href="https://www.businessinsider.com/personal-finance/what-is-a-good-debt-to-income-ratio" target="_blank" rel="noopener">debt-to-income ratio of 36% or less</a>. Consider paying down some debts, such as credit cards or a car loan, to get a lower ratio.</li></ul><p>If you have a strong financial profile, it could be a good day to lock in a mortgage rate. But if not, you probably have time to improve your finances.</p><div><iframe src="https://smartasset.com/captivate/frame/umonjdcr" width="100%" height="630px" scrolling="auto" style="border: none;"></iframe></div><p><em>Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews.</em></p><bi-shortcode id="related-content-module" class="mceNonEditable" data-type="more-mortgage-coverage" data-sheetname="More Mortgage Coverage">Related Content Module: More Mortgage Coverage</bi-shortcode><p><a href="https://www.businessinsider.com/personal-finance/best-mortgage-refinance-rates-today-tuesday-january-12-2021#comments">Join the conversation about this story &#187;</a></p>
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