Current Mortgage Refinance Rates -- January 22, 2021: Rates Down Again

by Christy Bieber | Updated July 19, 2021 - First published on Jan. 22, 2021

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Mortgage refinance rates inched down again on Jan. 22. Should you refinance now?

Mortgage refinance rates fell slightly on Jan 22. Here's what you need to know about average rates on refinance loans today if you're thinking about getting a new mortgage to pay off your current home loan.

Mortgage Type Today's Interest Rate
30-year fixed refinance loan 2.936%
20-year fixed refinance loan 2.764%
15-year fixed refinance loan 2.401%

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 2.936%, down 0.001% from yesterday's average of 2.937%. For each $100,000 borrowed at today's average rate, your monthly principal and interest payment would add up to $418. This doesn't include either property taxes or insurance, which would likely also be added onto your monthly mortgage bill. Total interest costs would add up to $50,538 per $100,000 borrowed over the life of the loan.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 2.764%, down 0.008% from yesterday's average of 2.772%. A refinance loan at today's average rate would cost you $543 per month in principal and interest for each $100,000 you borrow. You'd be looking at total interest costs of $30,286 per $100,000 in mortgage debt over the life of the loan.

When you refinance to a 20-year loan, consider how your new loan's repayment timeline compares to your old one. If you had less than 20 years left to pay on your loan, choosing a 20-year refinance loan could mean raising your total repayment costs even if you drop your rate and monthly payment since you'd be paying interest for longer.

The same is true for a 30-year refinance loan, which is even more likely to lead to higher interest payments over time. Be sure to consider both monthly payment and total loan costs when deciding what loan option is best for you.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.401%, down 0.005% from yesterday's average of 2.406%. A refinance loan at today's average interest rate would cost you $662 per $100,000 borrowed. During your entire loan repayment period, you'd pay total interest costs of $19,185 per $100,000 borrowed.

Because a 15-year mortgage has the shortest repayment timeline, you're more likely to realize substantial interest savings by refinancing into this mortgage loan. Of course, monthly payments are higher than they would be with either a 20-year or 30-year refinance loan. You'll need to see if payments would be affordable before you decide this is the right choice.

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.

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