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Today several benchmark refinance rates receded.
Both 15-year fixed and 30-year fixed refinances saw their mean rates decline. At the same time, average rates for 10-year fixed refinances increased.
Mortgage refinance rates are constantly changing. However, they are currently very low. For those looking to refinance their existing mortgage, this might be a great opportunity to reduce your interest rate.
30-Year Fixed Refinance Rates
Right now, the average 30-year fixed refinance has an interest rate of 3.18%, a decrease of 1 basis point from a week ago. Just last month a 30-year fixed refinance had a smaller average rate of 1.00%.
You can use our mortgage calculator to get an idea of what your monthly payments will be and to understand how paying more each month will impact your mortgage. Our mortgage calculator will also show you how much interest you’ll be charged over the entire loan term.
15-Year Fixed-Rate Refinance
Currently the average rate for a 15-year fixed refinance loan is 2.58%, a decrease of 14 basis points over the previous week.
Monthly payments on a 15-year refinance loan can be a considerable amount more than what you’d get with a 30-year mortgage. However, a shorter loan term can save you thousands of dollars interest over the life of the loan.
10-Year Fixed-Rate Refinance
The average 10-year fixed refinance rate is 2.59%, an increase of 1 basis point from the rate observed over the previous week.
Monthly payments with a 10-year refinance term would cost even more than what you’d pay on a 15-year loan. The upside is you’d end up paying even less interest over the life of the loan.
Where Are Rates Going
To determine refinance rate trends, we use data aggregated by Bankrate, which is owned by the same parent company as NextAdvisor. Lenders nationwide supply information to Bankrate, which is provided in the table below:
|Product||Rate||A week ago||Change|
|30-year fixed refi||3.18%||3.19%||-0.01|
|15-year fixed refi||2.58%||2.72%||-0.14|
|10-year fixed refi||2.59%||2.58%||+0.01|
Rates as of November 11, 2020.
Is This the Right Time to Refinance?
In many cases, now is the right time to look into refinancing your existing mortgage. Over the last few months we’ve seen rates drop to record lows. Keep in mind, you will need a high credit score to qualify for these ultra-low rates. One thing to keep in mind is the Federal Housing Finance Agency has enacted a new 0.5% refinancing fee as of Dec. 1, 2020. This extra cost will apply to conventional refinance loans worth $125,000 or more. You’re likely to find many mortgage lenders that will add the additional fee into their loan offers in one way or another.
Current Landscape for Refinance Rates
Lenders have been unusually busy with refinance loans because of the low interest rates. So while many homeowners can save with a refinance, the time it takes to close on a loan can be longer than under normal circumstances. And as some mortgage lenders become more risk averse you’re more likely to run into stricter lending guidelines. So borrowers with blemishes on their credit report or who have recently changed jobs may find themselves unable to qualify for a refinance.
When Should You Refinance?
Although there are a variety of refinance loan types, the main reasons to refinance are to secure a lower interest rate or to adjust your loan’s term.
Getting a better interest rate can reduce your monthly payments and save you on interest in the long haul. You can also accomplish the same goal by changing your repayment terms. If you opt for a longer term, you could lower your monthly payments. The trade off to this strategy is you’ll end up paying more interest over the life of the loan. On the other hand, if you refinance to a shorter term loan, say a 15-year mortgage, you’ll pay off your loan sooner and end up paying less interest as a result. Of course, 15-year mortgages have noticeably higher monthly payments compared to 30-year loans. Thanks to the exceptionally low interest rates, you may be able to get the best of both worlds. If you can significantly reduce your interest rate with a refinance, you may be able to take out a shorter-term loan and still keep your payments around the same level.
If you have enough equity in your home, you could also do what is known as a cash-out refinance. With this particular refinance option, you’ll be taking out a bigger mortgage, but you’ll walk away with a chunk of cash. Because interest rates are so low, this is a decent opportunity to consolidate high-interest debt or finance a home improvement project.
How to Refinance Your Mortgage
The first step to refinancing your mortgage is to shop around with multiple lenders to find the best offer. To compare offers from every lender you need to look at more than just the interest rate. You should carefully look at the Loan Estimate form each lender will provide after you apply and be sure you’re paying reasonable fees.
What do You Need to Refinance?
Refinancing is a similar process to taking out a mortgage for a home purchase. During the underwriting process your lender will review your employment, check your credit, and you’ll be required to provide documents to verify your income. To avoid unnecessary delays communicate with your lender and have the documentation you need ready to go ahead of time.
How We Got These Rates
The rates we have included are averages provided by Bankrate and are calculated after the close of the previous business day. The lenders that the “Bankrate.com Site Average” tables include are not the same every day.
National lenders provide this mortgage rate information to Bankrate.com. It is possible the mortgage rates we reference has changed since this was published.