by Christy Bieber | March 4, 2021
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Mortgage refinance rates rose for most loans on March 4, 2021. Here's what you should know about today's rates if you're considering refinancing.
On Thursday March 4, 2021, mortgage refinance rates climbed again for most loans, continuing a trend that's been developing over the past few weeks. Those who are considering refinancing can take heart in the fact these rates remain competitive, though, and thus still present an opportunity for many homeowners to save on their current loan.
If you're thinking about refinancing, here's what you need to know about average mortgage refinance rates today.
|Mortgage Type||Today's Interest Rate|
|30-year fixed refinance loan||3.272%|
|20-year fixed refinance loan||2.956%|
|15-year fixed refinance loan||2.601%|
The average 30-year mortgage refinance loan rate today is 3.272%, up 0.009% from yesterday's average of 3.263%. For each $100,000 refinanced at today's average rate, your monthly principal and interest payment would add up to $436. Over the life of the refinance loan, your total interest costs would add up to $57,109 per $100,000 borrowed.
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The average 20-year mortgage refinance loan rate today is 2.956%, down 0.016% from yesterday's average of 2.972%. At today's average rate, the monthly principal and interest payment would add up to $552 per $100,000 in refinanced mortgage debt. You'd be looking at total interest costs of $32,575 per $100,000 in refinanced debt over the life of the loan.
Choosing a 20-year payoff timeline instead of a 30-year one results in higher monthly payments since you make a fewer number of payments. You'll be debt free faster, though, and save a lot of money in total interest costs over time.
The average 15-year mortgage refinance loan rate today is 2.601%, up 0.011% from yesterday's average of 2.590%. A mortgage refinance loan at today's average interest rate would cost you $672 per $100,000 borrowed. Total interest costs would add up to $20,880 per $100,000 borrowed over the life of the loan.
Again, the shorter the payoff time, the more total interest savings you'll get from refinancing -- but the higher your monthly payments will be. This is a tradeoff you need to weigh carefully as you decide which refinance loan is right for you.
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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