Current Mortgage Refinance Rates -- June 3, 2021: Rates Are Mixed

What's going on with mortgage refinance rates during the start of June?

If you are a homeowner, paying attention to mortgage refinance rates could be a smart financial move. A drop in rates compared with what you are currently paying on your home loan could mean it's time to consider refinancing to reduce your interest costs.

Here are average mortgage refinance rates for June 3, 2021:

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 3.274%, up 0.014% from yesterday's average of 3.260%. If you refinance at today's average rate, your monthly principal and interest payment would be $437 per $100,000 borrowed. Total interest costs would add up to $57,149 per $100,000 borrowed over the life of the refinance loan.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 3.061%, down 0.003% from yesterday's average of 3.064%. Refinancing at today's average rate would leave you with a monthly principal and interest payment of $558 per $100,000 in mortgage debt. Over the life of the refinance loan, total interest costs would be $33,837 per $100,000 in mortgage debt.

Think carefully about the payoff timeline on your new refinance loan. The 20-year loan will result in you becoming debt free a decade sooner than the 30-year loan. You'll also save considerably on interest costs over time. Of course, as you can see, monthly payments are higher. Think about whether you'd rather have a lower monthly payment or lower total costs over time.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.553%, up 0.007% from yesterday's average of 2.546%. A mortgage refinance loan at today's average interest rate would cost you $669 per $100,000 borrowed. For each $100,000 you refinance at today's average rate, total interest costs would add up to $20,472.

With its short repayment timeline, the 15-year refinance would provide considerably more interest savings than the 30-year or 20-year refinance loans. This comes at a cost of higher monthly payments, so see if the tradeoff is worth it to 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'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 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.