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For borrowers considering a refinance, getting a good mortgage rate is vital. Refinancing your mortgage isn't cheap, but getting a low rate can help you earn back what you spend, in addition to freeing up space in your monthly budget for other financial goals.
The exact rates available to you will depend on your individual financial situation as well as what the mortgage lenders you apply with can offer you. To ensure you're getting a good deal, check out today's 30-year refinance rates.
In February, 30-year refinance rates averaged around 6.82%, according to Zillow data. This is 50 basis points higher than they were the month before, and it's also 30 basis points above February's average 30-year mortgage rate for purchase mortgages.
Rates have remained elevated so far this month, and 30-year refinance rates have occasionally ticked up above 7%.
For those looking to refinance, mortgage rates should go down in 2024 and 2025. Borrowers who initially got their mortgages when rates were at their peak may have an opportunity to refinance into a lower monthly payment in the next year or two.
The longer your term, the higher your mortgage refinance rate will be.
In the first half of 2023, the average 30-year fixed rate was 0.72 percentage points higher than the average 15-year fixed rate, according to Freddie Mac data. This means that over the life of the loan, 30-year borrowers could end up spending hundreds of thousands more in interest than 15-year borrowers.
However, the benefit of a 30-year mortgage is that it comes with lower monthly payments. A borrower with a 30-year mortgage may spend more in interest, but they'll also have a monthly mortgage payment that's hundreds of dollars cheaper than a comparable 15-year mortgage borrower.
You don't necessarily need to work with your current lender when you refinance. The best thing you can do to ensure you get a low refinance rate is get preapproved with at least two or three mortgage lenders to compare offers. Additionally, if you have room to improve your credit, doing things like paying down debt can help boost your score and get you a better rate.
Pros: Almost all 30-years can be paid off early, and any additional payments you make over your monthly obligation can be directed toward principal only. So you can quickly reduce your loan balance and interest, since interest is calculated monthly based on the remaining balance.
Cons: Whether or not it's a good time to refinance depends on your current rate and if it's higher or lower than today's average rates. For most borrowers, now probably isn't a good time to refinance. Many homeowners already have mortgage rates that are significantly lower than current rates, so refinancing likely wouldn't save them any money.
If you're considering a refinance, it's important to think about your goals. Typically, homeowners refinance when they want to decrease their monthly payment, lower their interest rate, or take cash out of their home. But doing so is only worth it if the benefits outweigh the costs.
Because you'll pay closing costs, it can cost a couple thousand dollars or more to refinance. If you plan to move soon or you can't get a lower rate, it could be difficult or impossible for you to recoup the cost of refinancing.
If you want to take out some of the equity you have in your home while also replacing your current mortgage, you'll want to get a cash-out refinance. The cash you get at closing from one of these refinances can be used for whatever you want, though people commonly use it to fund home projects or repairs or to pay off other debt.
To get a 30-year cash-out refinance, you'll first want to make sure you have enough equity. Lenders will typically let you borrow up to 80% of your home's value.
Mortgage rates have increased in recent months. Average 30-year refinance rates were 6.82% in February, and they remain elevated this month.
You can refinance a 30-year fixed-rate mortgage if you want to lower your rate, change your term, or take cash out of your home with a cash-out refinance.
When you should refinance depends on your goals. If you want a lower rate on your mortgage, you may need to wait, since today's 30-year refinance rates are higher than they've been in recent years.
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