Current Mortgage Refinance Rates -- February 4, 2021: Rates Move Up

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What happened with mortgage refinance rates as we move into February?

With February getting underway, mortgage refinance rates increased slightly today. Many homeowners who have not recently refinanced will find these rates to be extremely competitive, as they remain near record lows.

Here's what you need to know about average mortgage refinance rates for Feb. 4, 2021.

Mortgage Type Today's Interest Rate
30-year fixed refinance loan 2.899%
20-year fixed refinance loan 2.701%
15-year fixed refinance loan 2.363%

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 2.899%, up 0.01% from yesterday's average of 2.889%. Refinancing at today's average rate would leave you with a monthly principal and interest payment of $416 per $100,000 in mortgage debt. Your total interest costs over the life of the loan would equal $49,824 per $100,000 borrowed.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 2.701%, up 0.024% from yesterday's average of 2.677%. A refinance loan at today's average interest rate would cost you $540 per $100,000 borrowed. For each $100,000 you refinance at today's average rate, total interest costs would add up to $29,540

A mortgage loan with a 20-year repayment term will be cheaper in the long run than the 30-year option because you pay off your loan so much faster. Of course, you'll have to incur higher monthly payments due to the truncated timeline for repaying your debt.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.363%, up 0.003% from yesterday's average of 2.360%. A mortgage refinance loan at today's average interest rate would cost you $660 per $100,000 borrowed. During your entire loan repayment period, you'd pay total interest costs of $18,865 per $100,000 borrowed.

Like the 20-year loan, a 15-year refinance loan cuts off a lot of repayment time compared with the 30-year loan. In fact, since the repayment period is even shorter with this loan, monthly payments are again higher, but total interest savings is substantial.

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.

Our Research Expert

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