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If you want to make an informed decision about the terms of your mortgage loan, you can use mortgage rates as a guide. There are two types of mortgages: adjustable-rate mortgages (ARMs) and 30-year fixed-rate mortgages. ARMs fluctuate according to market conditions after a fixed period of time. They are typically designated as 5/1 or 7/6, with the first number indicating the number of years of fixed rate. The second number refers to the frequency of rate changes after the fixed period of time, usually every year or six months. ARMs also come with an initial cap, which is the maximum interest rate change allowed after the fixed period.
Interest rates for 15-year adjustable-rate mortgages
If you’re considering refinancing your mortgage, now may be a good time to get pre-approved. In mid-April, the average rate for a 15-year fixed-rate mortgage was 4.38%, while the rate for a 5/1 adjustable-rate mortgage was 3.75%. Rates are determined by a number of factors, including demand for mortgages, yield on U.S. Treasury bonds, credit score, and down payment. While you can’t control the economic situation, you can control your financial picture to secure the lowest rate.
While 15-year mortgage rates are often higher than 30-year mortgage rates, they’ve been yo-yoing recently. In some weeks, they’ve fallen and then spiked. However, it’s unlikely that they’ll go lower again until 2020 or 2021, when they’re expected to go back up. You can compare 15-year mortgage rates with 30-year mortgage rates using a mortgage calculator.
Most adjustable-rate mortgages are based on one-year LIBOR or Constant Maturity Treasury indexes. After 2021, they’ll be based on the Secured Overnight Financing Rate (SOFR). This index is currently at 0.10 percent. Usually, you’ll have to pay 2.75% as a margin, so the new rate will be the index plus the margin.
15-year adjustable-rate mortgages are a great option for those who need a fixed-rate mortgage with a shorter term. The 15-year mortgage term can be used to buy a new home or refinance an existing mortgage. This fixed-rate loan is designed to be paid off sooner than a 30-year mortgage, which reduces the risk to the lender.
Interest rates for 15-year adjustable-rate (ARM) mortgages increased slightly this week. The average rate for a 30-year fixed-rate mortgage rose to 7.284% last week from 7.39% last week. Meanwhile, the average rate for a 15-year adjustable-rate mortgage fell to 6.44%, from 6.55% a week ago.
Although the lower interest rates make refinancing attractive for some borrowers, refinancing is only worth it if you plan on living in the same home for several years. While the cost of refinancing will increase the monthly payment, the savings from the lower interest rate should be more than offset by the cost of refinancing. The monthly payments of a 15-year adjustable-rate mortgage will not drastically change, but you’ll save a lot of money in interest.
15-year adjustable-rate mortgages have two main types: a 5/1 ARM and a 15-year ARM. The 5/1 ARM offers a low intro rate for the first five years. The 15-year ARM is based on an index rate plus a margin, or ARM margin.
In the short term, a 5/1 ARM is a good option. The interest rate on a 5/1 ARM is lower than for a 15-year fixed-rate loan, and it allows you to make a higher monthly payment if you want. A 15-year fixed-rate loan gives you more financial security and less risk.
Adjustable-rate mortgages are popular when the interest rate goes up. While their initial interest rate is low, it changes depending on the market. This can make the monthly payments more affordable for some borrowers. Whether or not the interest rate changes is good for you depends on the circumstances of your financial situation and goals.
Those with a high credit score can get a 15-year adjustable-rate mortgage. According to Zillow, 7/1 ARM mortgage rates averaged 3.78% in the first quarter of 2019; however, they rose to around 3% in 2015 and 2016 before falling again.
