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Should You Buy a Home in Cash Now That Mortgage Rates Are Rising? – The Motley Fool

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Mortgage rates have been rising sharply all year. Does it pay …….

Image source: Getty Images

Mortgage rates have been rising sharply all year. Does it pay to purchase a home in cash if you can?

Mortgage rates were nice and affordable throughout 2021. But rates have been climbing upward at a rapid pace over the past few months, and at this point, borrowing for a home is just plain expensive.

Here’s a summary of mortgage rates for April 20:

Mortgage Type

Today’s Interest Rate

30-year fixed mortgage


20-year fixed mortgage


15-year fixed mortgage


5/1 ARM


Data source: The Ascent’s national mortgage interest rate tracking.

30-year mortgage rates

The average 30-year mortgage rate today is 5.241%, up from 5.193% yesterday. A 30-year loan will give you lower monthly payments than you’ll get with a shorter-term loan, but it will cost you more in interest over time.

20-year mortgage rates

The average 20-year mortgage rate today is 5.118%, up from 5.042% yesterday. You’ll get a lower interest rate on a 20-year loan than with a 30-year loan since you’re cutting your repayment time by a decade, but your monthly payments will be higher.

15-year mortgage rates

The average 15-year mortgage rate today is 4.376%, up from 4.354% yesterday. With a 15-year loan, you’ll spend less money on interest in the course of repaying your home. But on a monthly basis, your payments will be higher.

5/1 ARMs

The average 5/1 ARM rate is 4.089%, up from 3.991% yesterday. A 5/1 ARM could save you money initially compared to a 30-year mortgage thanks to the lower interest rate you can snag. But after five years, your rate could start adjusting upward, making your mortgage payments more expensive.

Does it pay to make a cash offer now that rates are higher?

Higher mortgage rates mean you’ll get stuck paying more interest in the course of financing your home purchase. And so if you happen to be sitting on a pile of cash, you may be tempted to use it to purchase a home rather than deal with a mortgage.</…….


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