Today's Mortgage Refinance Rates -- January 12, 2021: Rates Tick Up Again

Can you get a good rate if you lock in on a refinance loan today?

On Jan. 12, 2021, mortgage refinance rates rose slightly, While refinance rates are a bit higher than yesterday, they are still extremely competitive. If you are thinking about securing a new home loan, now may still be a good time to act. Here's what you need to know about today's mortgage refinance rates so you can decide.

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 2.883%, up 0.015% from yesterday's average of 2.868%. A refinance loan at today's average rate would cost you $415 per month in principal and interest for each $100,000 you borrow. This doesn't include insurance or property tax, which most people pay as part of their mortgage payment. Total interest costs would add up to $49,515 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 2.750%, up 0.018% from yesterday's average of 2.732%. You'd be looking at a principal and interest payment of $542 per $100,000 borrowed at today's average rate. Over the life of the loan, you'd pay total interest costs of $30,120 per $100,000 borrowed.

When you take out a refinance loan with a shorter loan term, such as a 20-year loan versus a 30-year loan, you are going to have higher monthly payments but make fewer of them. Since you won't pay interest for as long, you'll save a lot of money over the life of the loan.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.356%, up 0.017% from yesterday's average of 2.339%. For each $100,000 borrowed at today's average rate, your total monthly principal and interest payment would be $660. Your total interest costs over the life of the loan would equal $18,806 per $100,000 borrowed.

The 15-year loan comes with even higher monthly payments compared with the 20-year refinance loan, but you benefit by reducing your total interest costs substantially since you are paying off your new loan so quickly.

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.