Financial

Today’s mortgage and refinance rates: May 31, 2021 | Rates drop

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Since last Monday, the majority of mortgage and refinance rates have gone down. They have also largely decreased from this point last month.

Rates remain low across the board, so it might be a good day to apply for preapproval and lock in a low rate.

You’ll probably want to apply for a fixed-rate mortgage rather than an adjustable-rate one. Fixed rates are starting lower than adjustable rates right now, and you won’t risk your rate increasing in a few years.

You don’t need to rush to take advantage of today’s low rates if you aren’t ready to buy or refinance, though. Rates should stay low until late summer or even fall.

Conventional rates from Money.com; government-backed rates from RedVentures.

Learn more and get offers from multiple lenders »

You can lock in a rate below 2.50% on a 15-year fixed mortgage, which is historically low.

Rates for conventional mortgages, which you may consider “standard mortgages,” are already low. But you can frequently get an even lower rate with a government-backed mortgage through the FHA or VA, contingent on which term length you are after. Government mortgages are great options if you are eligible.

Conventional rates from Money.com; government-backed rates from RedVentures.

Compare offers from refinancing lenders »

Both 15-year and 30-year fixed refinance rates are significantly better deals than adjustable rates right now, so you may want to consider a fixed-rate mortgage if you’re looking to refinance.

You could lock in an all-time low mortgage rate today if your finances are in order.

But rates will probably remain low for several months, so you don’t need to hurry if you aren’t ready to buy or refinance yet. You might have time to boost your finances, which will get you an improved rate.

Here are some tips to improve your financial situation:

  • Increase your credit score by paying all your bills in a timely fashion. Aggressively paying down debts or letting your credit age could also help your score.
  • Put down more for a down payment. The minimum down payment you’ll need to pay will be contingent on which type of mortgage you are after. Lenders frequently will give you better rates if you have more than the minimum.
  • Lower your debt-to-income ratio. Your DTI ratio is the amount you pay toward debts each month, divided by your gross monthly income. A lot of lenders want you to have a DTI ratio of 36% or less (although it depends on the type of mortgage). To improve your ratio, pay down debts or think about ways to earn more money.

You can get a low mortgage rate if your finances are in a good place, and you likely have time to make improvements and get a better rate.

Mortgage and refinance rates trendsMortgage rate trends

The majority of mortgage rates have decreased since last week. Since this point last month, most rates have also gone down.

Refinance rate trends

Since last Friday, fixed and adjustable refinance rates have held pretty steady, but they’ve fallen since last month. The FHA rate has ticked up since last week, and the VA rate has remained the same.

If you get a 15-year fixed mortgage, it will take you 15 years to pay down your mortgage, and your interest rate will remain the same the whole time.

You’ll make higher monthly payments with a 15-year term than a 30-year term because you’ll pay off the same loan principal in fewer years.

On the flip side, your total cost will be less with a 15-year fixed mortgage than a longer term. You’ll pay down the mortgage in less time and get a lower interest rate to boot.

With a 30-year fixed mortgage, you’ll pay a set interest rate over three decades. A 30-year term comes with a higher interest rate than a 15-year term.

Your monthly payments will be higher with a 30-year fixed mortgage than with a 15-year fixed mortgage, as you’re paying a higher interest rate for more years.

However, you’ll make smaller monthly payments with a 30-year term than with a shorter term, because you’re splitting up your payments over an extended period.

An adjustable-rate mortgage, commonly known as an ARM, will lock in your rate for an agreed-upon period. Then your rate will fluctuate periodically. A 7/1 ARM sets your rate for seven years, then your rate will change once per year.

Though ARM rates are at striking lows, you might still prefer a fixed-rate mortgage. You can get a low rate for 15 or 30 years without chancing a future rate increase with an ARM.

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

We’re also giving you rates for FHA and VA mortgages. These are two types of government-backed mortgages. Another type is a USDA mortgage, a less common loan for buyers who live in rural areas.

Government-backed mortgages are backed by government agencies. If you default on your payments, the agency repays your lender. Because these mortgages are safer than standard mortgages, lenders have more lenient requirements for your credit score, debt-to-income ratio, or down payment. They also frequently come with lower interest rates.

Government-backed mortgages can be great choices if you’re eligible. Here are your options:

  • FHA mortgage: This type of loan isn’t limited to a specific type of person. But it’s especially useful if your credit score isn’t good enough to qualify for a conventional mortgage.
  • VA mortgage: You might be eligible if you’re an active military member or veteran.
  • USDA mortgage: You’ll qualify if you live in a rural area and fall under a certain income limit.

Mortgage and refinance rates by state

Check the latest rates in your state at the links below.

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Utah
Vermont
Virginia
Washington
Washington DC
West Virginia
Wisconsin
Wyoming

About the authors

Laura Grace Tarpley is an editor at Personal Finance Insider, covering mortgages, refinancing, and lending. She is also a Certified Educator in Personal Finance (CEPF). Over her five years of covering personal finance, she has written extensively about ways to navigate loans.

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

Best Mortgage Rates Today: Monday May 31, 2021

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

You’ll probably want to apply for a fixed-rate mortgage rather than an adjustable-rate one. Fixed rates are starting lower than adjustable rates right now, and you won’t risk your rate increasing in a few years.

Source: https://www.businessinsider.com/personal-finance/mortgage-rates-may-31-2021-5?op=1

Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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