Mortgage refinance rates were mixed, but one key rate ticked
up.
The average rate for a 30-year fixed-rate refinance ticked
up, but the average rate on a 15-year fixed dropped. The average rate on
10-year fixed refi, meanwhile, sunk lower.
Refinancing rates change daily, but, overall, they are very
low by historical standards. If you’re in the market to refinance, it could
make sense to go ahead and lock if you see a rate you like.
30-year fixed refinance
The average 30-year fixed-refinance rate is 3.06 percent, up
1 basis point over the last seven days. A month ago, the average rate on a
30-year fixed refinance was higher, at 3.12 percent.
At the current average rate, you’ll pay $424.85 per month in
principal and interest for every $100,000 you borrow. Compared with last week,
that’s $0.54 higher.
You can use Bankrate’s mortgage calculator to figure out
your monthly payments and see what the effects of making extra payments would
be. It will also help you calculate how much interest you’ll pay over the life of
the loan.
15-year fixed refinance
The average for a 15-year refi is currently running at 2.51
percent, down 5 basis points over the last week.
Monthly payments on a 15-year fixed refinance at that rate
will cost around $664 per $100,000 borrowed. That’s clearly much higher than
the monthly payment would be on a 30-year mortgage at that rate, but it comes
with some big advantages: You’ll save thousands of dollars over the life of the
loan in total interest paid and build equity much more rapidly.
10-year fixed refinance
The average rate for a 10-year fixed-refinance loan is 2.52
percent, down 5 basis points from a week ago.
Monthly payments on a 10-year fixed-rate refi at 2.52
percent would cost $945.89 per month for every $100,000 you borrow. That’s a lot
more than the monthly payment on even a 15-year refinance, but in return you’ll
pay even less in interest than you would with a 15-year term.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go
from here, check out our Rate Trend Index, a weekly poll of mortgage experts.
Is now a good time to refinance?
Generally, yes. Rates have been trending at or near historic
lows for the past few months. Mortgage rates can rise and fall from week to
week, but they have been hovering around 3 percent, with some surveys showing
them in the high 2s. If you’re a homeowner with good or excellent credit, it’s
a good time to think about refinancing. Remember: The Federal Housing Finance
Agency will institute a new refinancing fee of 0.5 percent on all loans worth
$125,000 or more. That fee goes into effect Dec. 1, but many mortgage lenders
are already pricing the fee into their loan offers.
Current refinance rate landscape
Because of the low interest rates, the past few months have
been extremely busy for refinancing. It can still be a smart move for many
borrowers to refinance, but be ready to wait longer than normal to close on the
loan. Some lenders may have tightened their lending standards. It may be more
difficult to land a refinancing offer if your credit isn’t in good condition,
or if you’ve had a recent change in your employment.
When you should refinance
There are lots of reasons to refinance, but two major
drivers are changing the rate or term of your mortgage to save money, or a
cash-out refinance to fund other projects.
A rate/term change usually means you’re securing a lower
interest rate than what you’re paying on your existing mortgage, or that you’re
changing the period of time to pay off the loan — or both. Securing a lower
interest rate means you’ll have lower monthly payments and pay less interest
over the remaining life of your loan. Changing the length of time you’ll take
to pay off your mortgage can save you money in a few ways: if you lengthen the
term, you’ll have lower monthly payments. If you shorten the term, your monthly
payments may go up, but you’ll pay less interest over the life of the loan.
Because interest rates are so low right now, you may be able to shorten your
loan term and keep your monthly payments the same, or even make them lower.
A cash-out refinance is a way to borrow against the equity
you’ve built up in your home. It will make your mortgage bigger, but it can be
a cost-effective way to finance big projects like home renovations, because
mortgage interest rates are still much lower than those on personal loans or
credit cards.
How to refinance
The most important step to find a competitive refinance
offer is to shop around. Just like with securing a purchase mortgage, you want
to make sure you’re getting the best offer. That means you can go to your
current lender to see what they’re willing to do for you, but you should also
be open to finding a new institution. Compare all the terms that various
lenders are offering you, and see what makes the most sense in your own
situation. Sometimes, for example, you may trade a slightly higher interest
rate for other conveniences a particular lender may be able to offer you.
What you’ll need to refinance
Refinancing can be a big undertaking. Your lender will do a
credit check, and usually requires a lot of documents from pay stubs and tax
returns to bank and other financial statements.
It’s best to get all your possible supporting documents in
order ahead of time, so you’re ready to send things off when the bank requests
them.
And, start doing your calisthenics. Just like with a
purchase closing, you’ll have to sign a lot of documents to secure your new
loan.
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