Here’s what you can expect if you refinance your mortgage at current average rates.
On the first day of April, mortgage refinance rates increased for some loans, but decreased for others. It is helpful to watch average rates if you are considering refinancing your home loan. Keeping an eye on rates can help you decide if you will be able to save enough to make refinancing worthwhile.
Here are the current average mortgage refinancing rates as of April 1, 2021:
30-year mortgage refinancing rate
The 30-year average mortgage refinance rate today is 3.405%, up 0.005% from yesterday’s average of 3.400%. If you refinance at the current average rate, you would have a monthly principal and interest payment of $ 444 per $ 100,000 borrowed. Over the life of the refinance loan, the total interest charge would be $ 59,753 per $ 100,000 of mortgage debt.
Get $ 150 off closing costs with Better Mortgage
This is one of the best lenders that we have personally used to achieve big savings. No commissions, no set-up costs, low rates. Get a loan estimate instantly and $ 150 off closing costs.
20-year mortgage refinancing rate
The 20-year mortgage refinance average rate today is 3.105%, up 0.007% from yesterday’s average of 3.098%. For every $ 100,000 refinanced at the current average rate, your monthly principal and interest payment would be $ 560. This would be a total interest charge of $ 34,368 per $ 100,000 of mortgage debt refinanced over the term of the loan.
A 20 year loan has higher monthly payments than a 30 year loan. But the interest charges over time are less. These two facts are explained by the shortened repayment period. You have less time to make payments, so each is higher. But you won’t be paying interest for that long, so the total costs are lower.
15-year mortgage refinancing rate
The 15-year mortgage refinance average rate today is 2.688%, down 0.002% from yesterday’s average of 2.690%. If you refinance at the current average rate, your monthly principal and interest payments would be $ 676 for every $ 100,000 borrowed. Over the life of the refinance loan, the total interest cost would be $ 21,639 per $ 100,000 of mortgage debt.
With an even shorter repayment term than the 20-year loan, the interest savings are substantial over time with the 15-year refinance option. Of course, you will be paying much higher monthly payments as you can see. It’s important to weigh the trade-off when deciding if a shorter payment time makes sense for you.
Should You Refinance Your Mortgage Now?
Refinancing your mortgage can be a smart financial move if you are able to lower your interest rate and lower your monthly payments by getting a new home loan. However, there are a few key things to consider before refinancing.
First, if you extend your loan repayment term, you could end up paying higher total interest charges over time than with your current mortgage. This can happen even if you qualify for a lower interest rate because you will be paying interest over a longer period. You can avoid this problem by choosing a refinance loan with a shorter repayment term. Or you may decide that you are willing to pay more interest over the life of your loan in exchange for a lower monthly payment.
Second, you’ll want to factor in closing costs, which are the upfront costs you’ll have to pay when you refinance your mortgage. Ascent’s research found that the closing costs for a refinance loan for a mid-value home totaled between $ 5,000 and $ 12,500. However, your closing costs will depend on your mortgage amount, location, and lender.
You might have to offset those closing costs due to your lower monthly payments – but it can take time. If you save $ 200 a month by refinancing and pay $ 6,000 in closing costs, it would take you 2.5 years to break even. It’s important to do the math and determine if you’ll be staying in your home long enough for the refinancing to pay off.
In general, it’s a good idea to refinance if you don’t plan to move in the next few years and can lower your mortgage interest rate by 1% or more. With mortgage refinancing rates nearing their all-time low, many borrowers will find it a good time to refinance. Compare the rates of the best mortgage refinance lenders for personalized offers and decide if getting a new mortgage is right for you.