Compare current 30-year refinance rates

The lowest 30-year fixed refinance rate was in December 2020 at approximately 2.68%, according to historical data from Freddie Mac.

Regardless of how low current refinance rates are, it’s always wise to compare rates from several lenders. Minimizing your APR is an easy way to save money with fewer lifetime loan costs.

A good refinance rate is one that’s significantly lower than your current one. When you refinance, you’ll want to aim for a rate that’s at least one percentage point lower than your current rate. This will provide you with meaningful monthly savings and allow you to break even on your closing costs in a reasonable amount of time.

Today’s 30-year refinance rates are approximately 3%, and they’ve been slowly increasing since reaching a record-low in December 2020. So, if your current mortgage rate is 4% or higher, now might be a good time to refinance.

Typically, the best refinance rates assume you have a credit score of 740 or higher and an 80% loan-to-value ratio (LTV). They also assume you’re refinancing a single-family, primary residence.

It’s vital to compare quotes from several lenders as your rates and closing costs can differ widely. Rate shopping with Credible can help you find a great monthly payment for your circumstances.

The current 10-year Treasury bond rate primarily influences mortgage rates. If the 10-year rate increases, you can expect 30-year refinance rates to rise too.

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.

There are a number of other factors that determine the rate you qualify for as well, including:

• Credit score: Most lenders require an excellent credit score — typically 740 or higher — to qualify for the lowest rates.

• Debt-to-income (DTI) ratio: Minimizing your DTI works in your favor. Your lender may accept a DTI ratio of up to 43%, but many will want to see a lower number.

• Discount points: You might consider purchasing mortgage points at closing to reduce your APR and monthly payment.

• Down payment: Your lender may offer you a lower interest rate if you’re able to make a larger down payment. Lenders will view you as less of a risk the more you put down.

• Loan type: A traditional, rate-and-term refinance can have a lower rate than a cash-out refinance. This is because the latter option is often riskier for the lender due to higher loan amounts.

• Refinancing fees: Your lender may allow you to roll some of your closing costs into your new mortgage if you have sufficient equity. While you avoid an upfront expense, you might get saddled with a higher rate and, as a result, pay more in the long run.

Mortgage rates change daily. Be sure to get quotes from multiple lenders to secure the best rate and term when you’re ready to refinance your home loan. Credible simplifies this process and makes comparing multiple lenders easy.

While 30-year mortgages have the highest interest rates, they also come with the longest repayment period and smallest monthly payment. However, if you’re aggressive about paying off your mortgage or getting the lowest refinance rate, a 15-year mortgage can be a great option.

The two main benefits of a 15-year fixed-rate mortgage are:

1. Paying less interest charges for the life of the loan

2. Building equity faster

The major downside to 15-year mortgages vs. 30-year mortgages, of course, is the cost — because you only have half the time to pay off your loan, your monthly payment will be higher for a 15-year term than it would be for a 30-year term.

Below is an example of how refinance costs compare between loans with a 15-year term and 30-year term on a $250,000 starting balance. The example assumes an excellent credit score of 740.

If you’re refinancing because you want a lower rate, shorter terms are more likely to offer a better interest rate and APR.

Here is a glance at how refinance rates might differ by term:

There are several factors to consider as you compare refinance rates:

• Monthly payment: Choose the monthly payment you can comfortably afford. Don’t forget to include property taxes, insurance, and HOA dues that initial rate quotes may overlook.

• Remaining loan balance: A lower interest rate can boost your savings potential when most of your principal remains, even if you stick with a 30-year term.

• Estimated ownership period: If you only plan on living in the home for a few years, you might be better off choosing a longer repayment term. In this case, your monthly payment is smaller and you can use the cash difference to save for your next house or pay for home improvements. Refinancing into an adjustable rate mortgage (ARM) is another option to consider.

• Refinancing costs and fees: You’ll pay origination fees and appraisal costs just like your home purchase loan. The lender may let you roll some of these charges into the loan, which can affect your new monthly payment or rate.

Choosing a shorter refinance term increases your monthly payment but has several benefits.

Some of the reasons to consider a 10-year, 15-year, or 20-year period include:

• Less total interest costs: Shorter terms have lower interest rates and fewer monthly payments. As a result, you’ll pay less in interest over time.

• Desire to be debt-free: An accelerated repayment schedule means you can get out of debt sooner. On top of that, you’ll own your home free and clear. No longer having a house payment can greatly improve your finances if you have a limited income.

• You can afford other financial goals: If you can continue to save for other life events like retirement, vacations, or a new vehicle, a shorter term can minimize your interest payments. However, 30-year refinance rates may be lower than other consumer loans if you anticipate borrowing money for other large purchases.