Today's Mortgage Refinance Rates -- January 14, 2021: Rates Up Again

Rates went up again on Jan. 14. Should you refinance your mortgage?

On Jan. 14, 2021, mortgage refinance rates crept up again, continuing a trend from recent days. If you are considering refinancing your home loan, you should know that today's rates remain low by historical standards. Here's what you need to know about today's average rates.

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 2.927%, up 0.017% from yesterday's average of 2.910%. Refinancing at today's average rate would leave you with a monthly principal and interest payment of $418 per $100,000 in mortgage debt. Total interest costs would add up to $50,364 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 2.805%, up 0.024% from yesterday's average of 2.781%. A refinance loan at today's average rate would come with a monthly principal and interest payment of $545 per $100,000 borrowed. Your total interest costs over the life of the loan would equal $30,773 per $100,000 borrowed.

Refinancing to a 20-year loan can provide you with substantial interest savings compared with the 30-year option because you're repaying your loan a decade sooner. Of course, since you're making fewer monthly payments, each one must be higher.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.396%, up 0.016% from yesterday's average of 2.380%. You'd be looking at a principal and interest payment of $662 per $100,000 if you refinance at that rate today. The total costs of interest would add up to $19,143 per $100,000 borrowed at today's average rate.

With an even shorter repayment period than the 20-year refinance loan, a 15-year option comes with even more interest savings but even higher monthly payments. If the monthly cost is affordable to you, you may want to choose this option if your goal is to save as much as possible on interest.

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.