Current Mortgage Refinance Rates -- February 25, 2021: Rates Rise Again

Thinking about refinancing? Find out how average mortgage refinance rates are trending.

Refinancing can save you money on your home loan if you can reduce your interest rate. In recent months, mortgage refinance rates have been extremely low. While they've been shifting upward, they are still competitive.

Here's what you should know about average mortgage refinance rates for Feb. 25, 2021 if you're considering refinancing.

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 3.137%, up 0.031% from yesterday's average of 3.106%. At today's average rate, you'd pay $429 per month in principal and interest per $100,000 refinanced. Total interest costs would add up to $54,450 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 2.893%, up 0.027% from yesterday's average of 2.866%. At today's average rate, the monthly principal and interest payment would add up to $549 per $100,000 in refinanced mortgage debt. You'd be looking at total interest costs of $31,822 per $100,000 in mortgage debt over the life of the new loan.

As you can see, a 20-year refinance loan would save you a lot of money in interest over time compared with the 30-year loan. But there's a price for that savings: Higher monthly payments. Consider whether your goals are to lower your monthly mortgage costs as much as possible or to save as much as you can over time when you decide which loan term is best for you.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.510%, up 0.019% from yesterday's average of 2.491%. If you refinance at today's average rate, you'd have a monthly principal and interest payment of $667 per $100,000 borrowed. During your entire loan repayment period, you'd pay total interest costs of $20,107 per $100,000 borrowed.

With the 15-year loan, you're again faced with the question of whether you're willing to accept higher monthly payments in exchange for less interest expense over time. A 15-year loan can be the most affordable refinance option in terms of reducing the total costs of borrowing considerably. But the monthly payments are much higher, so make sure they aren't out of your budget.

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 upfront 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 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.