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When you refinance a home loan, you're replacing your current mortgage with a new one that comes with new terms. People often refinance to get a lower interest rate or otherwise shrink their monthly payment.
Mortgage refinance rates
See how mortgage refinance rates are trending today.
How to find the best mortgage refinance rates
To get the best rates on a refinance mortgage, shop around and get mortgage preapproval with at least two or three lenders to find the best mortgage refinance lenders for you. Compare offers and see who can give you the best overall deal.
You should compare each company's annual percentage yield (APR), not just interest rates. The APR is the interest rate plus the costs of things like discount points and fees. This number is higher than the interest rate and is a more accurate representation of what you'll actually pay on your mortgage annually.
30-year mortgage refinance rates
A 30-year fixed-rate mortgage will have a higher rate than a mortgage with a shorter term.
Mortgage rates across the board have skyrocketed this year, and mortgage refinance rates have been no different. However, rates have started falling more recently. Average 30-year refinance rates were around 7.42% in November, according to Zillow data. Refinance rates tend to be a bit higher than purchase rates.
Because rates are so high right now, it's probably not a good idea to refinance at the moment. If you're seriously struggling with your monthly payments, refinancing into a 30-year term could lower your monthly payment, since it would spread your payments out over a longer period of time. But that means you'll end up spending a lot more on interest in the long run.
15-year mortgage refinance rates
Because their terms are shorter, 15-year mortgage rates are lower than 30-year fixed-rate mortgages. When you refinance into a 15-year fixed rate, you'll pay off your new mortgage over 15 years. You'll get a lower rate than you would with a longer term, but your monthly payments will be higher because you're paying off the same mortgage principal in half the time.
In November, 15-year refinance rates averaged around 6.86%. But they've been trending lower more recently.
Mortgage refinance rate trends
Average refinance rates have been elevated in recent months and spiked in October. But they've since dropped substantially.
Mortgage rates have increased significantly this year thanks to stubbornly-high inflation. But price growth has come down quite a bit since it peaked last year, and mortgage rates are expected to go down in 2024 as a result.
Average cost of a mortgage refinance
As with your initial mortgage, you'll pay closing costs when you get a refinance mortgage. According to the Federal Reserve, refinance closing costs are usually 3% to 6% of your remaining mortgage principal. This comes to $3,000 to $6,000 for every $100,000 you borrow.
A report by financial tech company ClosingCorp states that the average refinance closing costs in 2021 were $2,375 without taxes.
Your closing costs partly depend on where you live and the value of your home. You could pay less in closing costs in Indiana, where home values and property taxes are fairly low, than in Connecticut, where values and taxes are relatively high.
Closing costs also depend on your lender. Many lenders charge certain lender fees, such as application or underwriting fees, which can add to your closing costs.
When you consider the cost to refinance your mortgage, consider whether the financial tradeoff will be worth it. You may cut your monthly payments by hundreds of dollars, or lock in a significantly lower rate that will save you thousands in the long run. In these cases, you may decide you're comfortable paying closing costs.
Pros and cons of refinancing a home
Pros
- Lower your monthly payment. If you get a lower rate or refinance into a longer term, your monthly payment will likely go down.
- Lower your overall interest costs. A lower interest rate or shorter term can cut down on the amount you'll pay in interest over the life of the loan.
- Tap into your home's equity. Cash-out refinancing allows you to take money out of your home and use if for things like debt consolidation or home improvements.
- Get a stable monthly payment. If you currently have an adjustable-rate mortgage, refinancing into a fixed-rate mortgage will keep your monthly mortgage payment predictable for the life of the loan.
Cons
- You'll have to pay closing costs. The cost to get a refinance could add up to several thousand dollars that you'll have to pay at closing.
- If you move too soon, you won't break even. If you don't keep the new mortgage long enough, you may end up spending more on closing costs than you'll save by refinancing.
- You could end up paying more in interest. Getting a longer term can save you money on a monthly basis, but over the life of the loan you'll have higher interest costs.
- Your monthly payments could go up. If you refinance into a shorter term, you'll have the benefit of paying off your mortgage faster, but you'll take on a higher monthly payment to do so.
Frequently asked questions
What are current mortgage refinance rates?
Refinance rates for 30-year fixed-rate mortgages have dropped below 7% in recent weeks.
Is it worth it to refinance a home loan?
The answer to this question depends on each person and situation. In general, refinancing is probably worth it if refinancing into a lower rate will save you more money than you'll spend on closing costs. It also may be worth it if your home has increased in value, or if your finances have improved so you can get a low rate.
How does a mortgage refinance work?
When you refinance a mortgage, you replace your original mortgage with a new one, which has a different interest rate and term length. As a result, your monthly payment amount will also change.
You'll probably choose your top three or four favorite mortgage lenders, then compare rates and fees to find the best deal. An appraiser will come to your home to determine the house's value. Then you'll close on the new mortgage, which will be a similar process as the first time around.
Are mortgage rates different for refinancing?
Mortgage refinance rates are typically a little higher than purchase rates.
How much equity do you need in your home to refinance?
It depends on the lender, but many companies want you to have at least 20% equity to refinance a conventional mortgage or to get a cash-out refinance. You should be able to refinance with less if you have an FHA, VA, or USDA mortgage.
