by Christy Bieber | March 5, 2021
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Thinking of refinancing? Learn how mortgage refinance rates are trending on March 5, 2021.
With the first week of March drawing to a close, mortgage refinance rates fell on Friday. Rates had been moving up from record lows recently, so this small dip is good news. If you're interested in reducing your interest rate on your current home loan, check out today's average mortgage refinance rates to see if you could save.
|Mortgage Type||Today's Interest Rate|
|30-year fixed refinance loan||3.267%|
|20-year fixed refinance loan||2.932%|
|15-year fixed refinance loan||2.599%|
The average 30-year mortgage refinance loan rate today is 3.267%, down 0.005% from yesterday's average of 3.272%. At today's average rate, you'd pay $436 per month in principal and interest per $100,000 refinanced. This doesn't include property taxes or insurance. Total interest costs would add up to $57,010 per $100,000 borrowed over the life of the refinance loan.
The average 20-year mortgage refinance loan rate today is 2.932%, down 0.024% from yesterday's average of 2.956%. If you refinance at today's average rate, your monthly principal and interest payment would be $551 per $100,000 borrowed. Your total interest costs over the life of the loan would equal $32,288 per $100,000 borrowed.
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Think carefully about which loan repayment term is right for you. The monthly payments on the 20-year loan are higher than on the 30-year but lower than on the 15-year option. The total interest costs, on the other hand, are lower than the 30-year loan but higher than the 15-year. Both have to do with the length of time you're paying the loan. A shorter payoff time means reduced interest expense over time but higher monthly payments while you're making them.
The average 15-year mortgage refinance loan rate today is 2.599%, down 0.002% from yesterday's average of 2.601%. For each $100,000 refinanced at today's average rate, your total monthly principal and interest payment would be $671. Over the life of the refinance loan, your total interest costs would add up to $20,863 per $100,000 borrowed.
With its shortened payoff timeline, the 15-year refinance loan is much less expensive over time than the 20-year or 30-year loans. That's especially true since the interest rate is also considerably lower. But you're paying off your loan very quickly, so each of your monthly payments will be much higher because of it.
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, which are the upfront fees you'll 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.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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