Current Mortgage Refinancing Rates – January 28, 2021: Rates are falling

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Interest on mortgage refinancing has fallen today. Here’s what you need to know about the average interest rates for mortgage refinance loans.

As January draws to a close, mortgage refinancing rates declined today. If you’re a homeowner considering refinancing, here’s what you need to know about the average mortgage refinancing rates on January 28, 2021.

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Data source: Tracking the Ascent’s national mortgage interest rates

30-year mortgage refinancing rates

The average interest rate for mortgage loans with a term of 30 years is 2.897% today, a decrease of 0.015% compared to yesterday’s average of 2.912%. Refinancing at today’s average rate would get you a monthly principal and interest payment of $ 416 per $ 100,000 of mortgage debt. Total interest expense would add up to $ 49,785 per $ 100,000 borrowed over the life of the loan.

Mortgage refinancing rates with a term of 20 years

The average refinancing rate for 20-year mortgage loans is 2.691% today, down 0.032% from yesterday’s average of 2.723%. You would be looking at a principal and interest payment of $ 539 per $ 100,000 of refinanced mortgage debt at today’s average rate. During the entire repayment period of your loan, you pay the total interest expense of $ 29,422 per $ 100,000 borrowed.

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The interest paid over time is lower for a 20-year loan than a 30-year loan because you have the time it takes to repay your refinanced loan shortened. However, your monthly payments will be higher, so if you want to free up money in your budget, you may prefer the loan with the longer payment term.

15-year mortgage refinancing rates

The average interest rate for 15-year mortgage loans is 2.377% today, down 0.01% from yesterday’s average of 2.387%. A refinance loan at the current average rate would involve a monthly principal and interest payment of $ 661 per $ 100,000 borrowed. Your total interest expense over the life of the refinanced loan equals $ 18,983 per $ 100,000 borrowed.

A 15-year refinance loan is ideal for borrowers looking to maximize interest savings. Not only is the refinance rate lower than the 20-year or 30-year loan options, but you also pay much less interest, making the total interest cost much cheaper. You will of course have to make higher monthly payments as you will have to pay back your loan so quickly, so make sure it is affordable for you.

Should You Refinance Your Mortgage Now?

Refinancing your mortgage can be a smart financial decision if you can cut your interest rate and cut your monthly payments by taking out a new mortgage. However, there are a few important things to consider before refinancing.

First, if you extend the repayment term on your loan, you could end up paying higher total interest costs over time than you did on your existing mortgage. This can happen even if you qualify for a lower interest rate, as you pay interest over a longer period of time. You can avoid this problem by opting for a refinancing 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 need to consider closing costs. There are upfront costs to pay when you refinance your mortgage. This emerged from the Ascent’s investigation closing costs for a refinancing loan for a home with an average value of somewhere between $ 5,000 and $ 12,500. However, your closing costs will depend on the amount of your home loan, your location, and your lender.

You have to make up for these closing costs eventually because of your lower monthly payments, but that 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 consider whether you’ll be staying at your home long enough to pay back the refinance.

In general, it’s a good idea to refinance if you don’t plan on relocating in the next few years and you can cut your mortgage rate by 1% or more. With mortgage refinancing rates close to rock bottom, many borrowers will find it a good time to refinance. Compare rates of the best mortgage lenders to receive personalized offers and decide whether it is the right choice to take out a new mortgage.


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