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Today’s mortgage and refinance rates: May 6, 2021 | Rates drop

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Most mortgage and refinance rates have gone down since last Thursday. The only exception is the 10/1 adjustable purchase rate, which has increased by a few basis points.

It could be a good day to lock in a low mortgage rate. But you probably don’t have to worry about rates drastically increasing soon, either.

The Federal Reserve met on last week and decided to keep the federal funds rate at near zero, just as it’s been since the beginning of the coronavirus pandemic. The federal funds rate affects mortgage rates and gives a good picture of how the US economy is doing as a whole. When the federal funds rate is low, mortgage rates are usually low, too.

Feel free to lock in a low rate today, but you don’t have to hurry to take advantage of low rates if you aren’t ready yet.

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

Learn more and get offers from multiple lenders »

Mortgage rates are low overall today, but adjustable rates are over 4%.

Rates for conventional mortgages (which might be what you think of “regular mortgages”) are low. 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.

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

Compare offers from refinancing lenders »

Refinance rates tend to be higher than purchase mortgage rates. But you can refinance into a VA loan or 15-year fixed-rate mortgage with a rate under 3%.

Today could be a good time to lock in a low mortgage rate. But if you aren’t ready to buy or refinance yet, you probably don’t have to worry about missing out on great rates. Mortgage rates should stay low for at least a few months.

In fact, you may have time to improve your finances to land an even better rate. Consider the following steps:

  • Improve your credit score by making payments on time or paying down debt. You can request a copy of your credit report to hunt for any mistakes that could be tanking your score.
  • Save more for a down paymentThe smallest down payment you’ll require will be contingent on which type of mortgage you want. But if you can put down more than the minimum you need, you’ll likely get a better rate.
  • Decrease 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 prefer a DTI ratio of 36% or less. To improve your ratio, pay down debts or look for ways to increase your income.

You can secure a low rate now if your finances are in order, but there’s no need to rush to get a mortgage or refinance if you’re not ready. 

Mortgage rate trends

Other than 10/1 ARM rates, mortgage rates have decreased since last Thursday. All mortgage rates are down since this time last month.

Refinance rate trends

Refinance rates are down since last Thursday, and they’ve dropped more significantly since this time last month.

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

You’ll pay more per month with a 15-year fixed mortgage than a 30-year fixed mortgage, because you’ll pay off the same mortgage principal in half the time. 

On the plus side, a 15-year term will cost less than a longer term. You’ll pay off the mortgage years in fewer years, and you’ll get a lower interest rate.  

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. 

A fixed-rate mortgage sets your rate for the entire time you’re paying off your mortgage. But with an adjustable-rate mortgage, you’ll pay a constant rate for a predetermined amount of time. After that, your rate will vary periodically. A 10/1 ARM sets your rate for a decade, then your rate will fluctuate yearly.

Although ARM rates are at all-time lows now, you may still want to get a fixed-rate mortgage. The 30-year fixed rates are lower than ARM rates, so it could be an excellent opportunity to secure a low rate with a fixed mortgage. This way, you won’t need to worry about your rate increasing in the future with an ARM.

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

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. 

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, 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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