Current Mortgage Refinance Rates -- January 15, 2021: Rates Continue to Rise

Refinance rates are up a bit from yesterday but remain low on a whole. Should you apply for a new mortgage now?

Mortgage refinance rates rose a bit compared to Thursday. While refinance rates tend to be a little higher than the rates you'll see for a new purchase mortgage, they're still very competitive right now. This is what today's rates look like:

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

30-year mortgage refinance rates

The average 30-year refinance rate today is 2.935%, up 0.008% from yesterday. At today's rate, you'll pay principal and interest of $418.37 for every $100,000 you borrow. That doesn't include added expenses like property taxes and homeowners insurance premiums.

20-year mortgage refinance rates

The average 20-year refinance rate today is 2.809%, up 0.004% from yesterday. At today's rate, you'll pay principal and interest of $545.04 for every $100,000 you borrow. Though your monthly payment will go up by $126.67 with a 20-year, $100,000 loan versus a 30-year loan of the same amount, you'll save $19,808.05 in interest over the course of your repayment period for every $100,000 you borrow.

15-year mortgage refinance rates

The average 15-year refinance rate today is 2.403%, up 0.007% from yesterday. At today's rate, you'll pay principal and interest of $662.09 for every $100,000 you borrow. Compared to the 30-year loan, your monthly payment will be $243.72 higher per $100,000 in mortgage principal. Your interest savings, however, will amount to $31,439.36 over the life of your repayment period per $100,000 of mortgage debt.

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 with a new home loan. However, there are a few important things to think about before you refinance.

First, if you extend your loan repayment term, you could end up paying a higher amount of total interest 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 period. You can avoid this 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'll need to consider closing costs, which are the upfront fees you'll be charged when you refinance a 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 specific amount of your mortgage, 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, it would take 2.5 years to break even. It's important to run the numbers and consider whether you'll stay in your home long enough for refinancing to pay off.

Generally speaking, refinancing can make a lot of sense if you don't intend to move within the next few years and you're able to reduce the interest rate on your home loan by at least 1%. Despite the fact that mortgage refinance rates have ticked upward in the course of the past week, they're still sitting near record lows, so many borrowers will find that it's a good time to refinance. This especially holds true if you have a strong credit score and a low debt-to-income ratio, because those factors will make you a more appealing loan candidate -- and that means you're more likely to snag the lowest refinance rates available where you live.

If you're ready to swap your existing home loan for a new one at a more competitive rate, shop around for offers from different mortgage refinance lenders. Also, pay attention to the closing costs each refinance lender wants to charge, because the lower those are, the sooner you'll get to break even and start enjoying what could be a significant amount of savings. Keep in mind, too, that closing costs can be negotiable, so if a lender comes back with a low refinance rate but higher fees at closing, it never hurts to push back.