Several closely watched mortgage refinance rates floated higher today.
Nationwide averages on 30-year fixed and 15-year fixed refinances both rose. The average rate on 10-year fixed refi, meanwhile, also advanced.
Rates for refinancing are constantly changing, but they continue to represent a bargain compared to rates before the Great Recession. If you’re in the market to refinance, it may make sense to go ahead and lock if you see a rate you like.
30-year fixed refinance
The average 30-year fixed-refinance rate is 2.94 percent, up 3 basis points from a week ago. A month ago, the average rate on a 30-year fixed refinance was unchanged, at 2.94 percent.
At the current average rate, you’ll pay $418.37 per month in principal and interest for every $100,000 you borrow. That’s up $1.60 from what it would have been last week.
You can use Bankrate’s mortgage calculator to estimate your monthly payments and find out how much you’ll save by adding extra payments. It will also help you calculate how much interest you’ll pay over the life of the loan.
15-year fixed refinance
The average rate for a 15-year fixed refi is 2.39 percent, up 1 basis point from a week ago.
Monthly payments on a 15-year fixed refinance at that rate will cost around $659 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll come out thousands of dollars ahead over the life of the loan in total interest paid and build equity much more quickly.
10-year fixed refinance
The average rate for a 10-year fixed-refinance loan is 2.40 percent, up 2 basis points over the last week.
Monthly payments on a 10-year fixed-rate refi at 2.40 percent would cost $937.25 per month for every $100,000 you borrow. As you can see, the hefty savings in interest costs you’ll reap with that short 10-year term comes with the downside of a much larger monthly payment.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go from here, check out our Rate Trend Index, a weekly poll of mortgage experts.
Want to see where rates are right now? Lenders nationwide respond to Bankrate’s weekday mortgage rates survey to bring you the most up-to-date rates available. Here you can see the latest national average rates for a wide variety of refinance loans:
|30-year fixed refi||2.94%||2.91%||+0.03|
|15-year fixed refi||2.39%||2.38%||+0.01|
|10-year fixed refi||2.40%||2.38%||+0.02|
Rates as of January 7, 2021.
Want to see where rates are right now? See refinance rates for a variety of loan options here.
Is now a good time to refinance?
Generally, yes. Rates have been trending at or near historic lows for the past few months. Mortgage rates can rise and fall from week to week, but they have been hovering around 3 percent, with some surveys showing them in the high 2s. If you’re a homeowner and have good or excellent credit, you should consider refinancing. Keep in mind that the Federal Housing Finance Agency will institute a new refinancing fee of 0.5 percent on all loans worth $125,000 or more, beginning Dec. 1. Many mortgage lenders are already pricing the fee into their loan offers.
Current refinance rate environment
Because of the low interest rates, the past few months have been extremely busy for refinancing. It can still be a smart move for many borrowers to refinance, but be ready to wait longer than normal to close on the loan. Some lenders may have tightened their lending standards. It may be more difficult to land a refinancing offer if your credit isn’t in good condition, or if you’ve had a recent change in your employment.
When you should refinance
There are lots of reasons to refinance, but two major drivers are changing the rate or term of your mortgage to save money, or a cash-out refinance to fund other projects.
A rate/term change usually means you’re securing a lower interest rate than what you’re paying on your existing mortgage, or that you’re changing the period of time to pay off the loan — or both. Securing a lower interest rate means you’ll have lower monthly payments and pay less interest over the remaining life of your loan. Changing the length of time you’ll take to pay off your mortgage can save you money in a few ways: if you lengthen the term, you’ll have lower monthly payments. If you shorten the term, your monthly payments may go up, but you’ll pay less interest over the life of the loan. With mortgage rates at historic lows, you may be able to shorten the length of your loan and still keep your monthly payments the same — or even make them lower.
With a cash-out refinance, you borrow against the equity you’ve built in your home. It will make your mortgage bigger, but it can be a cost-effective way to finance big projects (think home renovations or repairs) because mortgage rates are much lower than rates on personal loans and credit cards.
How to refinance
The most important step to find a competitive refinance offer is to shop around. Just like with securing a purchase mortgage, you want to make sure you’re getting the best offer. That means you can go to your current lender to see what they’re willing to do for you, but you should also be open to finding a new institution. Compare all the terms that various lenders are offering you, and see what makes the most sense in your own situation. Sometimes, for example, you may trade a slightly higher interest rate for other conveniences a particular lender may be able to offer you.
What you’ll need to refinance
Refinancing can be a big undertaking. Your lender will do a credit check, and usually requires a lot of documents from pay stubs and tax returns to bank and other financial statements.
Get your supporting documents in order ahead of time so you’re ready to send things off when the bank asks for them.
And, start doing your calisthenics. Just like with a purchase closing, you’ll have to sign a lot of documents to secure your new loan.
Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.
To learn more about the different rate averages Bankrate publishes, see “Understanding Bankrate’s Rate Averages.”
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|Product||Purchase Rates||Refinance Rates|
|The index above links out to loan-specific content to help our readers learn more about rates by loan type.|
|30-Year Loan||Today’s 30-Year Mortgage Rates||Current 30 Year Refinance Rates|
|20-Year Loan||20-Year Fixed Mortgage Rates||20-Year Refi Rates|
|15-Year Loan||15 Year Fixed Mortgage Rates||15-Year Refi Interest Rates|
|10-Year Loan||Current 10 Year Mortgage Rates||10-Year Mortgage Refinance Rates|
|FHA Loan||FHA Mortgage Interest Rates||Current FHA Loan Refinance Rates|
|VA Loan||VA Loan Rates||VA Refinance Rates|
|ARM Loan||ARM Interest Rates||ARM Refi Mortage Rates|
|Jumbo Loan||Jumbo Mortgage Rates||Jumbo Mortgage Refinance Rates|