by Christy Bieber | June 8, 2021
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Interested in saving on interest by refinancing your home loan? Check out today's average refinance rates.
Deciding to refinance your home is a big decision since you need to consider closing costs as well as potential interest savings. Average mortgage refinance rates can help you determine how much your new loan might cost compared with your old one so you can decide if refinancing makes sense.
Check out average mortgage refinance rates for June 8, 2021 to see what type of home refinance loan you might be able to qualify for if you're a typical borrower:
|Mortgage Type||Today's Interest Rate|
|30-year fixed refinance loan||3.271%|
|20-year fixed refinance loan||3.043%|
|15-year fixed refinance loan||2.554%|
The average 30-year mortgage refinance loan rate today is 3.271%, up 0.001% from yesterday's average of 3.270%. If you refinance at today's average rate, your monthly principal and interest payment would be $436 per $100,000 borrowed. Total interest costs would add up to $57,089 per $100,000 borrowed over the life of the refinance loan.
The average 20-year mortgage refinance loan rate today is 3.043%, down 0.003% from yesterday's average of 3.046%. A loan at today's average rate would cost you $557 per month in principal and interest for each $100,000 you refinance. Total interest costs would add up to $33,621 for each $100,000 refinanced over the loan's duration.
The repayment timeline on this loan is a decade shorter than the payoff time on the 30-year loan. Shortening your payoff time reduces interest costs over the life of the loan since you pay interest for fewer years. Monthly payments are higher, though, so make sure to see if they'll fit in your budget.
The average 15-year mortgage refinance loan rate today is 2.554%, down 0.003% from yesterday's average of 2.557%. You'd be looking at a principal and interest payment of $669 per $100,000 refinanced at today's average rate. Over the life of the refinance loan, you'd pay total interest costs of $20,480 per $100,000 borrowed.
You can save the most interest over time with this loan due to its very short payoff time. But the monthly payments may be a stretch, so be sure you can cover them.
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 have 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.
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.
The Ascent's in-house mortgages expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See The Ascent's full advertiser disclosure here.
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