Today's Mortgage Refinance Rates -- January 8, 2021: Rates Tick Up but Remain Competitive

hat happened with mortgage refinance rates on Jan. 8, 2021?

On Jan. 8, 2021, mortgage refinance rates went up a bit on all loans. If you're thinking about refinancing your home loan, here's what you need to know about average rates today.

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 2.856%, up 0.011% from yesterday's average of 2.845%. If you refinance at today's average rate, your monthly principal and interest payment would be $414 per $100,000 borrowed. This doesn't include property taxes or insurance. During your entire loan repayment period, you'd pay total interest costs of $148,996 per $100,000 borrowed.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 2.718%, up 0.011% from yesterday's average of 2.707%. A refinance loan at today's average rate would come with a monthly principal and interest payment of $541 per $100,000 borrowed. Over the life of the loan, your total interest costs would add up to $29,741 per $100,000 borrowed.

A 20-year refinance loan has higher monthly payments than a 30-year loan but interest costs are lower over the repayment period. Both of these factors are explained by the fact you're paying your loan off a decade faster.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.334%, up 0.005% from yesterday's average of 2.329%. For each $100,000 borrowed at today's average rate, your total monthly principal and interest payment would be $659 Over the life of the loan, total interest costs would be $18,621 per $100,000 in mortgage debt.

Since refinancing to a 15-year loan means you're choosing an even shorter repayment period, you're again trading lower total interest costs for higher payments each month. If you can afford to make the payments, you may prefer this option since it will save you money over time.

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.