Compare current 20-year refinance rates

Freddie Mac doesn’t track 20-year refinance rates specifically. In general, though, 20-year refinance rates are slightly lower than refinance rates for 30-year loans.

The average rate for a 30-year loan has hovered around 3% since the beginning of the COVID-19 pandemic, and 20-year refinance rates have naturally remained just below that threshold.

While 20-year refinance rates are currently in an uptrend, they still remain below their pre-pandemic average.

If you have an excellent credit score (740 or above), a good 20-year refinance rate may be slightly below 3%. For fair to good credit (600s to low 700s), your rate might be higher than 3%. However, mortgage rates remain near record lows, so while you might not receive the best rate with a lower credit score, a 20-year refinance rate at around 3% is still a relatively good rate.

Because rates fluctuate on a daily basis, you’ll want to compare today’s 20-year refinance rates with ones from the recent past to see if you’re receiving a good rate. It’s also important to compare multiple lenders as your personalized rates can vary.

You can quickly compare personalized rates, monthly payments, and fees with Credible in just a few minutes. Checking your refinance rates and terms with us is free and won’t affect your credit score.

Several market conditions affect 20-year refinance rates. The 10-year Treasury bond yield is one of the most significant variables as rising yields tend to indicate higher refinance rates.

The overall health of the economy also impacts rates. For example, rates can be lower during weak economic conditions, such as during the early days of the COVID-19 pandemic.

Unfortunately, rising inflation can cause rates to increase too. As short-term inflation rates are at multi-year highs, experts expect mortgage rates to rise accordingly. In response, you may decide to refinance sooner instead of later if the benefits are worth the cost.

While you cannot control the day-to-day mortgage rate changes, there are several factors you can improve to receive a better rate:

• Credit score: You’ll usually qualify for the lowest rates with a credit score of 740 or higher. Making on-time payments, paying off debt, and correcting credit report errors are three ways to improve your credit score.

• Debt-to-income (DTI) ratio: An ideal DTI ratio is 36% or less. If you can’t reduce your DTI to this level, conventional lenders may still accept your application with a maximum 50% ratio.

• Cash reserves: Having several months of cash reserves in your savings and brokerage accounts can make it easier to qualify for financing. The recommended amount depends on your personal circumstances and what type of property you’re buying.

• Loan-to-value (LTV) ratio: A lower loan-to-value ratio can make it easier to qualify for financing and help reduce your monthly payment. Most lenders want you to have an LTV of 80% before you can refinance.

• Repayment term: Shorter repayment periods have lower interest rates but higher monthly payments. Your lender can offer rates for the different repayment terms you qualify for after reviewing your finances.

• Lender fees: Your mortgage refinance closing costs are typically between 2% and 5% of the loan amount. You might be able to roll some of these fees into the loan or your lender may offer credits for a “no closing cost” mortgage. However, deferring the upfront payment can increase your APR.

If you want the lowest rates possible, a 10-year fixed-rate refinance is your best option. However, this mortgage refinancing loan type has the highest monthly payment.

When you need more affordable payments, a 20-year term is more budget-friendly despite the higher interest rate.

Whether you choose a 10-year or a 20-year term, your total interest savings are still significantly more than a 30-year mortgage refinance.

Here’s an estimate of what your new monthly payment and total interest savings might look like on a $200,000 loan for a 10-, 20-, and 30-year term.

This table shows how 20-year refinance rates compare to shorter and longer terms with a $200,000 loan balance ($600,000 for jumbo mortgages).

In addition to trying to get the lowest interest rate possible, make sure you can afford the monthly payment for accelerated repayment periods.

You’ll also want to save room in your budget for other expenses that might result in borrowing money at higher interest rates, such as purchasing a new vehicle or paying down high-interest credit card debt. Mortgage refinance rates are lower than most consumer loans and choosing a longer repayment period to get a smaller monthly payment frees up more cash for other priorities.