Today's Mortgage Refinance Rates -- May 25, 2021: Rates Down Again

Is now a good time to refinance?

Refinancing can be a smart choice for homeowners who can drop their interest rates. That's why keeping tabs on current rates is important. Mortgage refinance rates are down a bit for most loans today. Many homeowners will find these rates competitive if they haven't refinanced recently.

Here's what you need to know about average mortgage rates for May 25, 2021:

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 3.281%, down 0.003% from yesterday's average of 3.284%. A refinance loan at today's average rate would come with a monthly principal and interest payment of $437 per $100,000 borrowed. Total interest costs would add up to $57,287 per $100,000 borrowed over the life of the refinance loan.

20-year mortgage refinance rates

The average 20-year mortgage refinance loan rate today is 3.071%, down 0.008% from yesterday's average of 3.079%. You'd be looking at a principal and interest payment of $558 per $100,000 refinanced at today's average rate. Your total interest costs over the life of the refinance loan would equal $33,958 per $100,000 borrowed.

While you reduce total costs over time with this loan compared with the 30-year option, you are going to have to make higher monthly payments. That's because you don't have as many payments to make before your loan must be paid in full.

15-year mortgage refinance rates

The average 15-year mortgage refinance loan rate today is 2.571%, unchanged from yesterday's average. A mortgage refinance loan at today's average interest rate would cost you $670 per $100,000 borrowed. Over the life of the refinance loan, your total interest costs would add up to $20,625 per $100,000 borrowed.

With the shortest repayment time of these three options, the 15-year loan saves you considerably in total interest but of course results in much higher monthly payments.

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, which are 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.