Current Mortgage Refinance Rates -- December 29: Rates Inch Up

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Average refinance rates are up slightly but it remains a great time to refinance your home loan.

If you're hoping to refinance your home mortgage and reduce your interest payment, you're in luck. Mortgage refinance rates are extremely competitive right now, although they inched up a bit since yesterday.

Here's what you need to know about average mortgage refinance rates for Dec. 29.

Mortgage Type Today's Interest Rate
30-year fixed refinance loan 2.868%
15-year fixed refinance loan 2.358%

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 2.868%, up 0.002% from yesterday's average of 2.866%. For each $100,000 borrowed at today's average rate, your monthly principal and interest payment would add up to $415. The total costs of interest would add up to $49,227 per $100,000 borrowed at today's average rate.

This is an extremely competitive rate and many homeowners could likely reduce their interest rate through refinancing. However, it's important to remember that this is just for principal and interest payments and you'll still need to pay property taxes and insurance.

Mortgage calculator

Check out The Ascent's mortgage calculator to see what your monthly payment might be and how much your loan will ultimately cost. Also learn how much money you'd save by snagging a lower interest rate, making a larger down payment, or choosing a shorter loan term.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.358%, up 0.015% from yesterday's average of 2.343%. A mortgage loan at today's average interest rate would cost you $18,823 per $100,000 borrowed. Over the life of the loan, total interest costs would be $660 per $100,000 in mortgage debt.

Your monthly payment with a 15-year refinance loan is much higher than with a 30-year loan. However, you are going to be free of your mortgage debt in half the time if you choose this loan option. Your total interest savings is also substantial compared with the 30-year loan since you're paying interest for so much less 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. There are up-front fees 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 1.) you don't plan to move in the next few years and 2.) 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.

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