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Today a few closely followed refinance rates shrank.
Both 15-year fixed and 30-year fixed refinances saw their mean rates trail off. At the same time, average rates for 10-year fixed refinances didn’t change.
Refinancing rates are constantly fluctuating. However rates have been hovering near historic lows for quite some time. For those looking to refinance their existing mortgage this may possibly be the perfect time to secure a record-low rate.
30-Year Fixed Refinance Rates
Right now the average 30-year fixed refinance loan has an interest rate of 3.07%, a decrease of 5 basis points over the previous week. Just last month a 30-year fixed refinance had a smaller average rate of 1.00%.
You can use our mortgage calculator to price out your monthly mortgage payments and to understand how much you could save if you made extra payments. 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 2.71%, a decrease of 2 basis points from what we saw last week.
Monthly payments on a 15-year refinance 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 2.58%, unmoved what we saw last week.
Monthly payments with a 10-year refinance term would cost a massive amount more per month than you would with a 15-year term, but you’ll pay less interest in the long term.
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 from across the country supply information to Bankrate, which is provided in the table below:
|30-year fixed refi||3.07%||3.12%||-0.05|
|15-year fixed refi||2.71%||2.73%||-0.02|
|10-year fixed refi||2.58%||2.58%||N/C|
Rates as of November 9, 2020.
Is This the Right Time to Refinance?
For many borrowers, now is an excellent time to refinance because rates have been near historic lows. While refinance rates change day to day, if you can lock in a rate near 3% that’s one way to secure an exceptionally low interest rate. One caveat is that in order to be eligible for the historically low rates you’ll need a strong financial profile. Having a low debt-to-low income ratio, strong credit score, and a healthy down payment is essential. 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
Recently, lenders have been exceptionally busy thanks to the inundation of mortgage refinance applications propelled by the low interest rates. So at the same time that many homeowners can save with a refinance, the time it takes to close on a loan can be longer than under normal circumstances. Thanks to the economic downturn, some lenders tightened their lending standards. That means those with weaker financial profiles or less equity in their homes may find it more difficult to qualify for a refinance loan.
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
Comparing offers from multiple lenders is essential to getting the best deal on a refinance. 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 that the fees you’re paying are comparable with one other.
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. Your lender should be able to provide you with a checklist of the supporting documents you’ll need, so you can organize them ahead of time.
How We Got These Rates
The rates we have included are averages provided by Bankrate’s site averages 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.