Current Mortgage Refinance Rates -- January 7, 2021: Some Rates Shift Up a Bit

Some mortgage refinance rates shifted up slightly on Thursday, but it could still be a great time to lock in.

Mortgage refinance rates were up slightly from yesterday on the 30-year and 15-year loans. They remained unchanged on the 20-year option. Here's what you need to know about average refinance rates on Jan. 7.

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 2.845%, up 0.009% from yesterday's average of 2.836%. At today's average rate, you'd pay $413 per month in principal and interest per $100,000 borrowed. Total interest costs would add up to $48,785 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 2.707%, unchanged from yesterday. A mortgage refinance loan at today's average interest rate would cost you $540 per $100,000 borrowed. Over the life of the loan, your total interest costs would add up to $29,611 per $100,000 borrowed.

Choosing a 20-year loan repayment term can save you considerable money on interest over the life of the loan, but monthly payments will be higher than if you selected the 30-year option due to the fact you're making payments for a full decade less time.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.329%, up 0.002% from yesterday's average of 2.327%. If you refinance at today's average rate, your monthly principal and interest payment would be $659 per $100,000 borrowed. During your entire loan repayment period, you'd pay total interest costs of $18,579 per $100,000 borrowed.

A 15-year loan is obviously an even shorter repayment timeline than a 20-year or 30-year loan, which means monthly payments are even higher if you select this option but your interest costs over the life of your loan are even lower.

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 1.) you don't plan to move in the next few years and 2.) 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.