What rate should you expect to pay if you refinance your home loan? Here are average mortgage rates for April 13, 2021.
Average mortgage refinance rates declined on Tuesday. Check out what today’s average rates are for 30-year, 20-year, and 15-year fixed-rate loans.
30-year mortgage refinance rates
The average 30-year mortgage refinance loan rate today is 3.388%, down 0.009% from yesterday’s average of 3.397%. If you refinance at today’s average rate, your monthly principal and interest payment would be $443 per $100,000 borrowed. Total interest costs would add up to $59,414 per $100,000 borrowed over the life of the refinance loan.
20-year mortgage refinance rates
The average 20-year mortgage refinance loan rate today is 3.101%, down 0.008% from yesterday’s average of 3.109%. You’d be looking at a principal and interest payment of $560 per $100,000 refinanced at today’s average rate. The total costs of interest would add up to $34,320 per $100,000 refinanced.
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When you refinance to a 20-year loan instead of a 30-year loan, you’ll trade higher monthly payments for more total interest savings over time. Consider whether this makes financial sense in your situation.
15-year mortgage refinance rates
The average 15-year mortgage refinance loan rate today is 2.661%, down 0.011% from yesterday’s average of 2.672%. A mortgage refinance loan at today’s average interest rate would cost you $674 per $100,000 borrowed. Your total interest costs over the life of the refinance loan would equal $21,391 per $100,000 borrowed.
With its shorter repayment timeline and lower interest rate, the 15-year refinance loan would save you the most money on interest over time. Of course, you’d have much higher monthly payments to make because of your shorter payoff time.
Should you refinance your mortgage right now?
Refinancing your mortgage can be a smart financial decision if you’re able to reduce your interest rate and lower your monthly payments by securing a new home loan. However, there are a few key things to think about before you refinance.
First, if you extend your loan repayment term, you could end up paying higher total interest costs over time than with your existing mortgage. This can occur even if you qualify for a lower interest rate since you’d be paying interest over a longer time. You can avoid this issue by choosing a refinance loan with a shorter repayment term. Or you may decide you’re willing to pay more interest over the life of your loan in exchange for a reduced monthly payment.
Second, you will have to consider closing costs, which are the upfront fees you’ll have to pay when you refinance your mortgage. The Ascent’s research revealed that closing costs on a refinance loan for a median value home total anywhere from $5,000 to $12,500. However, your closing fees will depend on the amount of your home loan, your location, and your lender.
You should eventually make up for these closing costs due to your lower monthly payments — but that can take time. If you save $200 per month by refinancing and pay $6,000 in closing costs, you would take 2.5 years to break even. It’s important to do the math and consider whether you’ll stay in your home long enough for refinancing to pay off.
In general, it is a good idea to refinance if you don’t plan to move in the next few years and you can reduce your mortgage interest rate by 1% or more. With mortgage refinance rates near record lows, many borrowers will find it’s a good time to refinance. Compare rates from the best mortgage refinance lenders to get some personalized offers and decide whether securing a new home loan now is right for you.