Today's Mortgage Refinance Rates -- May 21, 2021: Rates Are Mixed
by Maurie Backman | Updated July 19, 2021 - First published on May 21, 2021
Here's what today's refinance rates look like. Should you apply for a new home loan?
Mortgage refinance rates are mixed today with minimal movement compared to yesterday. Refinance rates tend to be a bit higher than the rates you'll see for a new purchase mortgage, and right now they're pretty competitive, historically speaking. Here's what refinance rates look like on Friday, May 21:
|Mortgage Refinance Type||Today's Interest Rate|
|30-year fixed refinance||3.289%|
|20-year fixed refinance||3.084%|
|15-year fixed refinance||2.575%|
30-year mortgage refinance rates
The average 30-year refinance rate today is 3.289%, down 0.001% from yesterday. At today's rate, you'll pay principal and interest of $437.00 for every $100,000 you borrow. That doesn't include added expenses like property taxes and homeowners insurance premiums.
20-year mortgage refinance rates
The average 20-year refinance rate today is 3.084%, down 0.001% from yesterday. At today's rate, you'll pay principal and interest of $559.00 for every $100,000 you borrow. Though your monthly payment will go up by $122.00 with a 20-year, $100,000 loan versus a 30-year loan of the same amount, you'll save $23,312.00 in interest over the course of your repayment period for every $100,000 you borrow.
15-year mortgage refinance rates
The average 15-year refinance rate today is 2.575%, up 0.002% from yesterday. At today's rate, you'll pay principal and interest of $671.00 for every $100,000 you borrow. Compared to the 30-year loan, your monthly payment will be $234.00 higher per $100,000 in mortgage principal. Your interest savings, however, will amount to $36,726.00 over the life of your repayment period per $100,000 of mortgage debt.
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 with a new home loan. However, there are a few important things to think about before you refinance.
First, if you extend your loan repayment term, you could end up paying a higher amount of total interest 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 period. You can avoid this 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'll need to consider closing costs, which are the upfront fees you'll be charged when you refinance a 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 specific amount of your mortgage, your location, and your lender.
You should eventually make up for these closing costs with your lower monthly payments -- but that can take time. If you save $200 per month by refinancing and pay $6,000 in closing costs, it would take 2.5 years to break even. It's important to run the numbers and consider whether you'll stay in your home long enough for refinancing to pay off.
Generally speaking, refinancing can make a lot of sense if you don't intend to move within the next few years and you're able to reduce the interest rate on your home loan by at least 1% (or somewhere close). And if you have a great credit score and a low debt-to-income ratio, then you're more likely to end up snagging a great rate on your refinance -- and saving big time because of it. You can improve both your credit score and your debt-to-income ratio by paying off existing credit card balances you're carrying.
If you're ready to replace your existing mortgage with a new one, contact a few different refinance lenders and see what rates and closing costs they have to offer. Each lender sets its own rate and fees, so the more offers you gather, the better-equipped you'll be to make the right choice.
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