Investing News

Updated: August 25, 2021

As of today, August 25, 2021, the benchmark 30-Year Fixed refinance rate is 3.15%, FHA 30-Year Fixed is 2.99%, Jumbo 30-Year Fixed is 3.32%; 15-Year Fixed is 2.44%, and 5/1 ARM is 2.54%. These rates are not the teaser rates you may see advertised online and based on our methodology should be more representative of what customers could expect to be quoted depending on their qualifications. You can learn more about what makes our rates different in the Methodology section of this page.

Today’s Mortgage Refinance Rates

Homeowners who want to save money on their mortgage interest or lower their monthly payments should look into refinancing. Finding the best refinance rates can help save thousands of dollars in interest and offers more wiggle room in your budget. Other reasons homeowners can benefit from a refinance include eliminating private mortgage insurance (PMI), paying off the mortgage quicker, tapping into home equity, and more.

Even with all these benefits, it may not make sense to refinance. For one, you must pay lender fees, much like you did when you took out your mortgage. That’s why it’s important to carefully consider whether there are enough financial incentives to do so. To help you in your decision-making process, take a look at the best mortgage refinance rates below, as well as questions to consider before signing on the dotted line.

Frequently Asked Questions

 Written By: Sarah Li Cain

What Is a Mortgage Rate?

A mortgage rate is the amount of interest a lender charges for a mortgage. This rate can be fixed, meaning it remains the same throughout the loan term or variable, varying in accordance with a benchmark interest rate.

One of the most important considerations for homeowners when refinancing is the mortgage rate. This percentage affects the monthly payments and what they’ll pay overall throughout the term of the loan.

What Is Mortgage Refinancing?

Mortgage refinancing is a type of loan where homeowners take out a new mortgage in order to pay off their existing one. Homeowners can replace their current mortgage rate and monthly payments with one that has a lower interest rate, saving them money. 

Lenders charge upfront fees for refinancing, similar to getting a mortgage loan. These fees may be worth it, especially if lower interest rates equate to significant savings over the long term. 

Other reasons homeowners refinance their mortgage include:

  • Lowering monthly mortgage payments: Lowering your mortgage rate can result in a lower monthly payment. Homeowners can also do so by refinancing to a longer loan term (this will not lower the amount of interest you pay overall).
  • Switching to a different mortgage type: Many homeowners who have adjustable-rate mortgages (ARMs) switch to fixed-rate mortgages to save on interest. Other reasons may be that homeowners want to get rid of mandatory insurance premiums from their FHA loan.
  • Changing the term of the mortgage: Homeowners can reduce their loan term to pay off their mortgage faster. 

The above reasons to refinance are typically through what’s called a rate-and-term refinance, the most common type of mortgage refinancing. Lenders will lend you your existing mortgage balance at a different rate and term. 

A type of refinancing called a cash-out refinance is another popular method for homeowners to refinance their loans. With a cash-out refinance, homeowners take out a loan for an amount higher than their current mortgage balance and keep the difference in cash. Homeowners opt for a cash-out refinance because it may offer a more competitive rate than a home equity loan or personal loan, and the cash can be used for most purposes, like making major home repairs. 

When you’re considering refinancing, it’s important to pay careful attention to the rate being offered and the fees you’ll need to pay. That way, you can decide if it’s worth switching over to a new mortgage. 

How Are Mortgage Refinancing Rates Set?

Mortgage refinancing rates typically move in conjunction with mortgage purchase rates. That means if mortgage purchase rates go down, you can assume refinance rates will decrease as well, and vice versa. In most cases, refinance rates are a bit higher than purchase rates, for instance, cash-out refinance rates are higher because it’s considered riskier. 

Lenders also assess your refinance rate based on factors such as your credit score and the amount of assets and liabilities you have. Plus, the amount of equity you have can also affect rates. The more home equity you have, the lower your refinance rate is. 

Does the Federal Reserve Decide Mortgage Rates?

Although the Federal Reserve doesn’t directly decide mortgage rates, it influences them when it changes short-term interest rates. Financial institutions like banks use these rates to borrow from each other, and these costs are usually passed onto borrowers. What this means is that if the Federal Reserve raises or lowers the short-term rates to guide the economy, lenders may do the same to their mortgage rates.  

What Is a Good Mortgage Refinancing Rate?

A good mortgage refinancing rate is one that’s much lower than your current one; most experts recommend at least one 1% lower, though if you can reduce it by at least 2%, that’s where you’ll see the most savings. 

Lenders will also consider your individual financial situation when determining your mortgage refinancing rate. Factors include your credit score, debt-to-income ratio, and the amount of home equity you have. It’s also important to shop around with multiple refinance lenders to ensure you’re getting the best rate. 

Do Different Mortgage Types Have Different Rates?

Different mortgage types have different rates. Both purchase and refinance rates can differ from one another, even if they both have the same loan term. Mortgages that have different term lengths may also have different rates—usually, the shorter the term, the lower the rate. 

Fixed-rate mortgages and ARMs generally have different rates. ARMs offer lower initial interest rates to attract borrowers. The rate is fixed for a predetermined amount of time, then fluctuates depending on current market conditions. 

Are Interest Rate and APR the Same?

Though frequently thought of as the same, the interest rate and APR are different charges. The interest rate only includes the interest lenders charge as a cost of you borrowing money. The APR includes lender fees and charges besides the interest rates. These fees may include application fees, origination fees, broker fees, closing costs, mortgage points, and any lender rebates. 

The APR tends to be higher than the interest rate because of the additional charges. Borrowers may find that lenders who offer credits or lower fees will have an APR that closely matches the interest rate. 

How Do I Qualify for Better Mortgage Refinancing Rates?

To receive the most competitive rates, you’ll need to make sure your financial situation is in tip-top shape. 

Here are a few ways to increase your odds of qualifying for better refinancing rates:

  • Increase your credit score: To see what your score is currently, get a free credit report from all three major credit bureaus from If there are any discrepancies, contact the appropriate lender to dispute them. Aside from that, the most effective way to raise your credit score is to make on-time payments on your debts and avoid taking out additional loans when applying for a refinance. 
  • Consider how long you’ll stay in your home or how soon you want to pay off your mortgage: For instance, if you want to refinance to a shorter-term and can afford the payments, you may be able to get a lower rate. Or if you plan on staying in the home for five to 10 years, an ARM with a low introductory rate may be the best route. 
  • Build your home equity: The more home equity you have, the more likely lenders believe you have more skin in the game, resulting in a lower interest rate.
  • Lower your debt-to-income ratio (DTI): This ratio is the percentage of your gross income going toward paying your monthly debt payments. The lower the percentage, the less risky you appear to lenders, resulting in a more competitive rate. To lower your rate, either increase your income or pay down more of your debt. 

How Big a Mortgage Can I Afford?

The amount you can afford to pay will depend on what you are currently paying for your existing mortgage. If you can comfortably afford your current mortgage, then refinancing to a similar (or lower) amount makes the most sense, especially if you’re refinancing to save on interest costs. 

However, if you find that you’re struggling to make your current payments, refinancing to a lower monthly payment is possible. That’s when it makes sense to speak to a lender about your options and to do some research in terms of how much interest you’ll pay overall. 

What Are Mortgage Points?

Mortgage points, or discount points, are fees lenders charge borrowers to grant them a lower interest rate. You can think of it as a prepaid interest in exchange for paying less in interest overall through the loan’s life. 

One mortgage point will lower your rate by 0.25%, or a quarter of a percent. It’ll cost 1% of your loan amount. For example, if you refinanced your loan for $300,000, one mortgage point will cost you $3,000. 

Should I Refinance My Mortgage?

Refinancing your mortgage is a great way to better manage your monthly mortgage payments or lower interest rates. Even with the potential savings, refinancing isn’t for everyone. 

Here are a few scenarios where it would make sense to refinance your mortgage:

  • Your financial situation has changed: Maybe your income has gone down and you’re finding it hard to manage your monthly mortgage payments or your credit score has gone up significantly to qualify for lower rates. In these instances, refinancing could help you better manage your monthly payments. 
  • You want to switch mortgage types: Many homeowners who are near the end of the fixed-rate period of their adjustable-rate mortgage refinance to a fixed-rate mortgage to avoid fluctuating rates. Some switch to shorter fixed-rate terms to pay off their home faster. 
  • You want to cash out your home equity: If you need to borrow cash to pay off high-interest bills or fund a major home renovation, refinancing can help you take out a loan that offers lower interest rates. 
  • You want to get rid of mortgage insurance: Some federally backed mortgages require borrowers to pay mortgage insurance for a predetermined amount of time or throughout the lifetime of the loan. As long as you’ve built up enough equity, refinancing to a new type of mortgage can help you get rid of mortgage insurance. 

In general, refinancing will make the most sense for homeowners who have a sizable amount of time left on their loan term. That’s because there will be costs associated with refinancing, so it’s important to calculate whether the money spent is worth it. 

Refinancing also makes the most sense when interest rates are much lower than what you’re currently paying. For instance, switching from a 30-year to a 15-year mortgage and taking advantage of the lower rates is worth it, but only if you can comfortably afford the monthly payments. 

Ultimately, you’ll need to decide what situation makes the most sense and that you’ve thoroughly researched all your options. You want to make sure that the new terms and conditions of the refinance will suit your borrowing needs and help you achieve your financial goals. 

What Are the Current Average Mortgage Refinancing Rates?

Average mortgage refinancing rates are similar to what you’ll find for mortgage purchase rates: around 2.9% for a 30-year term. Keep in mind that the average rates may not reflect quotes you’ll receive from lenders, which depend on individual factors such as your credit score, debt-to-income ratio, and your home equity. 


To find the best refinance mortgage rates, we constructed a borrower with a credit score ranging from 700 to 760 with a property loan-to-value ratio (LTV) of 80%. We then averaged the lowest rates offered by more than 200 of the nation’s top lenders. As such, these are the rates that real consumers will see when shopping for a mortgage. 

Mortgage rates may change daily and this data is only intended for informational purposes. A person’s personal credit and income profile will be the deciding factors in what rates and terms they can get. Loan rates do not include amounts for taxes or insurance premiums and individual lender terms will apply. 

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