Today's refi rates drop off : January 25, 2023
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Several closely watched refinance rates ticked downward today versus this time last week, according to data compiled by Bankrate.
- 30-year fixed refinance rate: 6.51%, --0.02 vs. a week ago
- 15-year fixed refinance rate: 5.76%, --0.17 vs. a week ago
- 10-year fixed refinance rate: 5.71%, -0.21 vs. a week ago
As price inflation persists, the Federal Reserve again moved aggressively at its November meeting. The Federal Reserve raised rates three-quarters of a percentage point for the fourth consecutive meeting, a strong policy move that continues to translate to rising mortgage rates.
The Fed doesn't directly control fixed mortgage rates, however — the most pertinent number is the 10-year Treasury yield. Even so, high inflation all but forces the Fed to act aggressively, and it sets the tone for rates overall.
Here's a pro tip: Getting multiple offers can save you thousands of dollars over the life of your mortgage.
"No matter whether the housing market is red-hot, in a cooling-off stage or something in-between, one can and should seek to save money on financing by seeking multiple offers on a mortgage,” says Mark Hamrick, Bankrate senior economic analyst. "The result is savings on the monthly payment, as well as during the entire experience of ownership, and the peace of mind that one got the best rate. That can literally equate to saving thousands of dollars in the long term."
30-year fixed refinance
The average 30-year fixed-refinance rate is 6.51 percent, down 2 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was higher, at 6.71 percent.
At the current average rate, you'll pay $632.73 per month in principal and interest for every $100,000 you borrow. That's lower by $1.31 than it would have been last week.
You can use Bankrate's mortgage calculator to figure out your monthly payments and see what the effects of making extra payments would be. It will also help you calculate how much interest you'll pay over the life of the loan.
15-year fixed refinance
The average for a 15-year refi is currently running at 5.76 percent, down 17 basis points from a week ago.
Monthly payments on a 15-year fixed refinance at that rate will cost around $826 per $100,000 borrowed. That's clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, 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 quickly.
10-year fixed refinance
The average rate for a 10-year fixed-refinance loan is 5.71 percent, down 21 basis points over the last seven days.
Monthly payments on a 10-year fixed-rate refi at 5.71 percent would cost $1,095.70 per month for every $100,000 you borrow. If you can manage that big monthly payment, you'll enjoy even more interest cost savings than you would with a 15-year term.
Where will refinance rates head in the future?
Since the beginning of the coronavirus pandemic in 2020, rates were hovering around historic lows. Now, rates are edging higher as the Federal Reserve aims to contain inflation.
Most experts expect rates to continue to increase through 2022.
"Until inflation peaks, mortgage rates won't either," says Greg McBride, CFA, Bankrate chief financial analyst.
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.
| Product | Rate | Change | Last week |
|---|---|---|---|
| 30-year fixed refi | 6.51% | 0.02 | 6.53% |
| 15-year fixed refi | 5.76% | 0.17 | 5.93% |
| 10-year fixed refi | 5.71% | 0.21 | 5.92% |
Last updated January 25, 2023.
What is a refinance?
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 common 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. The latter allow homeowners to take advantage of their home equity by taking out a new mortgage with a larger principal based on the home’s current value.
30-year refi? 15-year refi? Cash-out? What is right for me?
No matter what kind of refinance you choose, 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 in front of you.
That said, a 30-year refinance is the right choice for many people. Extending the term of your loan means lower monthly payments, which can help if you have a tight budget.
A 15-year refi has some advantages, too, namely that you pay a lot less interest over the life of the loan. Because 15-year loans tend to have lower interest rates than their 30-year counterparts and a shorter repayment window, the overall savings can be significant. Keep in mind, 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 6 percent interest:
| Term | Monthly payment | Total cost |
|---|---|---|
| 30-year | $1,798 | $647,934 |
| 15-year | $2,531 | $455,746 |
A new mortgage can also help you tap your home equity if you choose a cash-out option. If you have enough equity in your home, you can apply for a new mortgage with a larger principal balance and take the difference from what you owe on your old loan in cash. Doing this can allow you to finance other spending at a low rate compared with other forms of borrowing. Some of the most common uses for cash-out funds are home improvements, debt consolidation or education financing.
What does it cost to refinance?
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 comes out to $6,000 to $15,000 in closing costs.
How much can you save by refinancing? Is it a good time to refi?
Because many homeowners locked in record-low rates in 2020 and 2021 and they've since since gone up, refinancing generally isn't a money-saving move at this time. Consider refinancing in the future if prevailing interest rates fall below the rate you currently have on your mortgage.
Keep in mind, though, you’ll want to calculate your break-even timeline. If you’re planning to move soon, you may not save enough to recoup your closing costs before you do.
How to shop for a mortgage
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.
How to get the best mortgage rate
- Shop around
- Do your research 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
Minimum credit scores for different kinds of mortgages
Different mortgages have different minimum requirements for their borrowers. Although lenders are free to adjust these requirements 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. However, if your credit score is higher than these minimums, you may be able to secure 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."
Shopping for the right mortgage lender?
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| Loan Type | Purchase Rates | Refinance Rates |
|---|---|---|
| The index above links out to loan-specific content to help you learn more about rates by loan type. | ||
| 30-Year Loan | Current 30 Year Mortgage Rates | 30-Year Refinance Interest Rates |
| 20-Year Loan | 20-Year Mortgage Interest Rates | 20-Year Refinance Interest Rates |
| 15-Year Loan | 15-Year Mortgage Interest Rates | 15-Year Refi Interest Rates |
| 10-Year Loan | 10-Year Mortgage Interest Rates | 10-Year Refi Interest Rates |
| FHA Loan | FHA Mortgage Interest Rates | FHA Refinance Interest Rates |
| VA Loan | Current VA Mortgage Rates | VA Refinance Rates |
| ARM Loan | ARM Interest Rates | ARM Refinance Interest Rates |
| Jumbo Loan | Jumbo Loan Rates | Jumbo Refinance Rates |