Current Mortgage Refinance Rates -- January 28, 2021: Rates Slide Down
by Christy Bieber | Updated July 19, 2021 - First published on Jan. 28, 2021
Mortgage refinance rates fell today. Here's what you need to know about average interest rates for mortgage refinance loans.
With January drawing to a close, mortgage refinance rates declined today. If you are a homeowner who is thinking about refinancing, here's what you need to know about average mortgage refinance rates on Jan. 28, 2021.
|Mortgage Type||Today's Interest Rate|
|30-year fixed refinance loan||2.897%|
|20-year fixed refinance loan||2.691%|
|15-year fixed refinance loan||2.377%|
30-year mortgage refinance rates
The average 30-year mortgage refinance loan rate today is 2.897%, down 0.015% from yesterday's average of 2.912%. Refinancing at today's average rate would leave you with a monthly principal and interest payment of $416 per $100,000 in mortgage debt. Total interest costs would add up to $49,785 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 2.691%, down 0.032% from yesterday's average of 2.723%. You'd be looking at a principal and interest payment of $539 per $100,000 in mortgage debt refinanced at today's average rate. During your entire loan repayment period, you'd pay total interest costs of $29,422 per $100,000 borrowed.
The interest paid over time is lower on a 20-year loan than a 30-year loan because you've shortened the time it will take to pay back your refinanced loan. Your monthly payments will be higher, though, so if you're looking to free up cash in your budget you may prefer the loan with the longer payment term.
15-year mortgage refinance rates
The average 15-year mortgage refinance loan rate today is 2.377%, down 0.01% from yesterday's average of 2.387%. A refinance loan at today's average rate would come with a monthly principal and interest payment of $661 per $100,000 borrowed. Your total interest costs over the life of the refinanced loan would equal $18,983 per $100,000 borrowed.
A 15-year refinance loan is ideal for borrowers who want to maximize interest savings. Not only is the refinance rate lower than on the 20-year or 30-year loan options, but you'll also be paying interest for far less time so total interest costs are much cheaper. Of course, you will have higher monthly payments to make since you must repay your loan so fast, so be sure this is affordable for you.
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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