Today’s mortgage and refinance rates: May 5, 2021 | Rates decrease

Most mortgage and refinance rates have gone down since last Wednesday. This decrease comes after a week of most rates increasing.

All rates are lower than this time last month, and rates are at historic lows overall. Mortgage rates should remain low for a while, so you don’t need to hurry to buy to take advantage of low rates if you aren’t ready.

But if you know you want to buy soon, you should probably start the process of applying for preapproval and locking in a rate. According to a study by Redfin, over half of homes in the US are selling in two weeks or less right now. So once you’re ready to buy, you’ll want to be able to make an offer quickly.

Mortgage rates on Wednesday, May 5, 2021

Conventional rates from; government-backed rates from RedVentures.

Learn more and get offers from multiple lenders »

Fixed mortgage rates are significantly lower than adjustable mortgage rates right now.

Rates for conventional mortgages (which might be what you think of “regular mortgages”) are low overall today. But mortgages backed by the FHA and VA usually pay even lower rates, depending on which term length you choose. Government-backed mortgages are great options if you’re eligible to apply.

Refinance rates on Wednesday, May 5, 2021

Conventional rates from; government-backed rates from RedVentures.

Compare offers from refinancing lenders »

Refinance rates are low across the board today. The lowest rates are on a VA loan or a 15-year fixed-rate mortgage.

How to lock in a good mortgage rate

Mortgage and refinance rates are low, so it could be a good day to lock in a rate. But you may not need to rush to get a low rate.

Rates will probably stay low for the foreseeable future. You have time to improve your finances, which could result in a better interest rate. Consider the following steps:

  • Increase your credit score by paying all your bills on time. You could also pay down debts or let your credit age.
  • Save for a larger down paymentYou may need between 0% and 20% for a down payment, depending on which type of mortgage you get. But if you can pay more than the minimum upfront, a lender might reward you with a lower 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. The lower your DTI ratio, the better. Consider paying down debts more aggressively to get a better ratio.

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

Mortgage and refinance rates trends

Mortgage rate trends

Most mortgage rates have dropped since last Wednesday. The exception is the 10/1 ARM rate, which is up by 10 basis points. All rates are down since this time last month.

Refinance rate trends

All mortgage refinance rates have decreased since last Wednesday and since this time last month.

How 15-year fixed rates work

With a 15-year fixed mortgage, it will take you 15 years to pay off your loan, and you’ll have the same interest rate the whole time.

A 15-year fixed mortgage will cost less than a 30-year fixed mortgage. You’ll pay off the mortgage in less time, and you’ll receive a better interest.

On the other hand, your monthly payments will be higher with a 15-year term than a longer term because you’re paying down the same mortgage principal in fewer years.

How 30-year fixed rates work

With a 30-year fixed mortgage, you’ll pay off your mortgage over 30 years, and you’ll pay the same interest rate for the life of the loan. A 30-year term has a higher interest rate than a shorter term.

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

On the flip side, you’ll pay less per month with a 30-year term than with a 15-year fixed term, because you’re dividing your payments over more years. 

How adjustable rates work

An adjustable-rate mortgage, often called an ARM, will set your rate for an agreed-upon amount of time then it will alter periodically. A 10/1 ARM secures your rate for a decade. Then, your rate will increase or decrease once per year. 

While ARM rates are now at striking lows, a fixed-rate mortgage might be the better deal. You can secure a low rate for 15 or 30 years without having to risk a potential future rate increase 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.

How government home loans work

We’re also providing rates for FHA and VA home loans, two kinds of government-backed mortgages.

Government mortgages are backed by government agencies. The government pays the lender if you fail to make mortgage payments.

Government-backed home loans are less risky than conventional mortgages, so lenders have more lenient requirements for your credit score, debt-to-income ratio, or down payment. Government mortgages also come with lower interest rates. These mortgages can be great deals if you qualify. Here are your options:

  • FHA mortgage: FHA loans are mostly for people with lower credit scores. But these mortgages aren’t limited to a certain type of person, like VA and USDA loans.
  • VA mortgage: You may be eligible if you’re an active military member or veteran.
  • USDA mortgage: You could 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. 

New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Rhode Island
South Carolina
South Dakota
Washington DC
West Virginia

Laura Grace Tarpley is an editor 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.

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.

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