Want to save on interest by refinancing your home loan? Check out today’s average refinancing rates.
The decision to refinance your home is an important decision as you need to consider closing costs as well as potential interest savings. Average mortgage refinancing rates can help you determine how much your new loan might be worth compared to your old one, so you can decide if refinancing makes sense.
Check out the average mortgage refinancing rates as of June 8, 2021 to find out what type of home refinancing loan you can qualify for if you are a typical borrower:
Refinancing rates for a 30 year mortgage
The average 30-year mortgage refinancing rate today is 3.271%, up 0.001% yesterday’s average 3.270%. If you refinance at today’s average rate, your monthly principal and interest payment will be $ 436 for every $ 100,000. The total interest expense will be $ 57,089 for every $ 100,000 borrowed over the life of the refinancing loan.
Mortgage refinancing rates for 20 years
The average 20-year mortgage refinancing rate today is 3.043%, down 0.003% from the 3.046% average yesterday. A loan at today’s average rate will cost you $ 557 per month in principal and interest for every $ 100,000 you refinance. The total interest expense is $ 33,621 for every $ 100,000 refinanced over the life of the loan.
The loan has a ten-year maturity period than the 30-year loan. Shorter repayment periods reduce interest expense over the life of the loan because you pay interest for fewer years. The monthly payments are higher, though, so make sure they fit within your budget.
Mortgage refinancing rates for 15 years
The average 15-year mortgage refinancing rate today is 2.554%, down 0.003% from the 2.557% average yesterday. You would look at the $ 669 principal and interest payments on $ 100,000 refinanced at today’s average rate. During the term of the refinancing loan, you must pay a general interest expense of $ 20,480 for every $ 100,000 borrowed.
You can save the most interest over time with this loan due to its very short repayment period. But monthly payments can be overwhelming, so rest assured that you can cover them.
Should you refinance your mortgage right now?
Refinancing your mortgage can be a smart financial decision if you can lower your interest rate and lower your monthly payments by getting a new home loan. However, there are a few key points to consider before refinancing.
First, if you extend the maturity of your loan, you can pay a higher overall interest expense over time than with your existing mortgage. This can happen even if you are eligible for a lower interest rate, as you will be paying interest for a longer time. You can avoid this problem by choosing a refinancing loan with a shorter maturity. Or, you may decide that you are willing to pay more interest over the life of the loan in exchange for a lower monthly payment.
Second, you will need to factor in closing costs, which are upfront payments that you will have to pay when refinancing your mortgage. Ascent research found that closing expenses on refinancing loan for an average home value of $ 5,000 to $ 12,500. However, the closing fees will depend on the amount of your home loan, your location, and your lender.
You will eventually have to offset these closing costs with lower monthly payments, but this can take time. If you save $ 200 a month through refinancing and pay $ 6,000 to close the deal, it will take you 2.5 years to pay off. It’s important to calculate and consider whether you will stay in your home long enough for the refinancing to pay off.
In general, refinancing is recommended unless you plan on moving in the next few years and can lower your mortgage interest rate by 1% or more. With mortgage refinancing rates close to record lows, many borrowers will feel this is a good time to refinance. Compare rates from best mortgage refinance lenders to get personalized offers and decide if getting a new home loan is right for you.