Multiple closely watched refinance interest rates receded today, July 20th.
- 30-year fixed refinance rate: 2.99%, –0.12 vs. a week ago
- 15-year fixed refinance rate: 2.32%, –0.10 vs. a week ago
- 10-year fixed refinance rate: 2.34%, -0.11 vs. a week ago
30-year fixed refinance
The average 30-year fixed-refinance rate is 2.99 percent, down 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was higher, at 3.25 percent.
At the current average rate, you’ll pay $415.16 per month in principal and interest for every $100,000 you borrow. That’s a decline of $6.44 from last week.
You can use Bankrate’s mortgage calculator to get a handle on what your monthly payments would be 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 2.32 percent, down 10 basis points since the same time last week.
Monthly payments on a 15-year fixed refinance at that rate will cost around $384 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 save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.
10-year fixed refinance
The average rate for a 10-year fixed-refinance loan is 2.34 percent, down 11 basis points from a week ago.
Monthly payments on a 10-year fixed-rate refi at 2.34 percent would cost $383.78 per month for every $100,000 you borrow. If you can manage that substantial monthly payment, you’ll enjoy even more interest cost savings than you would with a 15-year term.
What does it mean to refinance your mortgage?
Refinancing your mortgage means taking out a new home loan. In the process, you’ll fully pay off your existing loan, and then start payments on a new one. The two most popular kinds of mortgage refinances are rate-and-term changes — which result in a new interest rate and a reset payment clock — and cash-out refinances. Cash-out refinances allow homeowners to take advantage of their equity by taking out a new mortgage with a larger principal based on the home’s current value.
30-year refi? 15-year refi? Which is right for me?
No matter what kind of refinance you decide to undertake, once you close on your new loan, the payment clock goes back to zero. So, for example, if you take out a new 30-year mortgage, you’ll have another 30 years of payments ahead of you.
That said, a 30-year mortgage refinance is the right choice for a lot of people. Extending the term of your loan means lower monthly payments, which can free up some extra funds if money is tight.
A 15-year refinance has some advantages, too, namely that you pay a lot less interest over the life of the loan. 15-year mortgages tend to charge lower rates than 30-year mortgages, and they also have a shorter repayment window, so the overall savings can be significant. Remember, though, that a short repayment window is a double-edged sword. It does help you save in the long term, but with less time to pay, 15-year mortgages have higher monthly payments.
Here are sample payments on a $300,000 mortgage at 3 percent interest:
|Term||Monthly payment||Total cost|
What will a refinance cost?
Refinance costs can change based on where you’re located, the lender you’re working with and a range of other factors. The general rule of thumb, however, is that costs are around 2 to 5 percent of the loan’s principal amount. On a $300,000 mortgage, that means $6,000 to $15,000 in closing costs.
Can I save money with a refinance? Is now a good time to refi?
Yes, depending on your situation. Especially with mortgage rates near all-time lows, it’s a great time to refinance. If you have a loan that you’ve been holding since before 2020, you’re almost guaranteed to be able to refinance to a lower-rate loan. That can mean significant savings month to month and over the life of the loan, so it’s worth looking into.
Remember, however, you’ll want to calculate your break-even timeline. If you’re planning to move soon, you may not save enough to make up for your closing costs before you do.
Where are mortgage refinance rates headed?
Since the beginning of the coronavirus pandemic in 2020, rates have been hovering around historic lows. Industry experts say this can’t last forever, and most expect rates to close out 2021 higher and on an upward trend.
In the near term, though, borrowers have caught another break. With the Federal Housing Finance Agency’s announcement that it will end the 0.5 percent fee on most refinances, you can expect rates to hold steady or drop in the next few weeks.
Meanwhile, the Federal Reserve seems poised to keep interest rates on bonds low, which could keep mortgage rates favorable into the fall.
To see where Bankrate’s panel of experts expect rates to go from here, check out our Rate Trend Index.
Want to see where rates are right now? See local mortgage rates.
|30-year fixed refi||2.99%||0.12||3.11%|
|15-year fixed refi||2.32%||0.10||2.42%|
|10-year fixed refi||2.34%||0.11||2.45%|
How to shop for and compare mortgages
Shopping around and comparing offers is critical to get the best deal on your mortgage refinance. Make sure to get quotes from at least three lenders, and pay attention not just to the interest rate but also to the fees they charge and other terms. Sometimes it’s a better deal to choose a slightly higher interest loan if the other aspects are favorable.
Steps to get the best mortgage rate
- Shop around
- Do your homework to understand the mortgage market in your area
- Consider working with a mortgage broker
- Don’t try to time the market — rates change nearly constantly, and you could lose out on a good deal if you wait
Minimum credit scores for different kinds of mortgages
Different mortgages have different minimum requirements for their borrowers. Although lenders are free to adjust these numbers as they please, here are the most common credit score minimums for some common types of mortgages:
- Conforming: 620
- Jumbo: 700
- FHA: 580 (or 500 if you have at least a 10 percent down payment)
- VA: Varies by lender, but typically between 580 and 640
- USDA: Varies by lender, but typically between 580 and 640
If your credit score is less than 500, work on improving it before applying for a mortgage, because most lenders won’t issue a loan to someone with a score of 499 or lower. Conversely, if your credit score is higher than these minimums, you may be able to get a better interest rate.
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.”