Current Mortgage Refinance Rates -- August 20, 2021: Rates Down for All Loans

Does refinancing your current home loan make sense? Check out today's average mortgage refinance rates to help you decide.

Average mortgage refinance rates were down across the board today. Keeping tabs on trends in mortgage rates is a smart move for homeowners, who may decide that refinancing is a smart choice if it can save them money.

Here are average mortgage refinance rates for Friday, Aug. 20:

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

30-year mortgage refinance rates

The average 30-year mortgage refinance loan rate today is 3.104%, down 0.008% from yesterday's average of 3.112%. Refinancing at today's average rate would leave you with a monthly principal and interest payment of $427 per $100,000 in mortgage debt. Your total interest costs over the life of the refinance loan would equal $53,804 per $100,000 borrowed.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 2.847%, down 0.005% from yesterday's average of 2.852%. A refinance loan at today's average rate would come with a monthly principal and interest payment of $547 per $100,000 borrowed. Over the life of the refinance loan, total interest costs would be $31,273 per $100,000 in mortgage debt.

This loan results in higher monthly payments than the 30-year refinance loan because you are making 120 fewer payments. But you save a lot of money over time by paying interest for a decade less.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.371%, down .008% from yesterday's average of 2.379%. At today's average rate, the monthly principal and interest payment would add up to $661 per $100,000 in refinanced mortgage debt. The total costs of interest would add up to $18,932 per $100,000 refinanced at today's average rate.

By cutting payment time in half compared with the 30-year loan, this mortgage saves you a lot of money over time. It also means making much higher monthly payments, though. Consider whether these will be affordable over the long term.

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 be charged 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.