Current Mortgage Refinance Rates -- January 26, 2021: Rates Are Mixed

by Christy Bieber | Updated July 19, 2021 - First published on Jan. 26, 2021

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Large, modern-style home with Today's Mortgage Refinance Rates graphic.

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What happened to average mortgage refinance rates on Jan. 26?

With January nearly at an end, mortgage refinance rates have seen some ups and downs this month. On Jan. 26, 2021, average rates on refinance loans were up for some loans and down for others. Here's what you need to know about average interest rates today.

Mortgage Type Today's Interest Rate
30-year fixed refinance loan 2.919%
20-year fixed refinance loan 2.744%
15-year fixed refinance loan 2.393%

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 2.919%, down 0.01% from yesterday's average of 2.929%. A refinance loan at today's average rate would come with a monthly principal and interest payment of $417 per $100,000 borrowed. Over the life of the new refinance loan, you'd pay total interest costs of $50,209 per $100,000 borrowed.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 2.744%, down 0.007% from yesterday's average of 2.751%. Refinancing at today's average rate would leave you with a monthly principal and interest payment of $542 per $100,000 in mortgage debt. The total costs of interest would add up to $30,049 per $100,000 borrowed at today's average rate.

With its shorter repayment timeline, the 20-year refinance loan could provide considerable savings on total interest paid. However, as you can see, monthly payments are higher for this loan option than for a 30-year refinance loan. You'll need to consider whether the priority for refinancing is to get the lowest possible monthly payment or save the most interest over time.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.393%, up 0.001% from yesterday's average of 2.392%. A refinance loan at today's average interest rate would cost you $662 per $100,000 borrowed. Over the life of the loan, your total interest costs would add up to $19,118 per $100,000 borrowed.

Since the 15-year refinance option is an even shorter loan term, the tradeoff between monthly payments and interest savings is more pronounced than with the 20-year loan. Think carefully about your financial goals and the flexibility of your budget when deciding which option is best.

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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