How to find today’s mortgage refinance rates
NerdWallet’s comparison tool can help you find current refinance rates for your mortgage. In the filters above, click or tap "Refinance" and enter a few details about your home loan. We’ll scan multiple lenders to provide you with personalized rate quotes within moments and without a credit check.
How do you get the best mortgage refinance rate?
In terms of factors you can alter, your credit score is front and center for influencing the refinance rate you will receive. Check your credit report before refinancing to make sure there aren’t any errors. Build your credit score before refinancing by paying your bills on time and keeping credit utilization low.
Debt is also important. For a conventional loan refinance, lenders usually want a debt-to-income ratio of no more than 36%. Your DTI is the amount of debt you pay each month divided by your gross, or pre-tax, monthly income.
The type of refinance can also affect your interest rate. Lenders generally consider cash-out refinances to be the most risky, because they entail borrowing against home equity and taking out a larger loan. As a result, cash-out refinances tend to have higher interest rates than rate and term refis.
To ensure you’re getting the best possible rate, request quotes from multiple refinance lenders. Compare the interest rate, annual percentage rate (APR), estimated closing costs and other fees included on each Loan Estimate.
And don’t forget to lock in your refinance rate. A rate lock will prevent the interest rate you've been offered from rising before your loan closes. Some lenders also offer a “float down” option, which will protect you if rates take a downward turn.
» MORE: How mortgage rates are set
How does a mortgage refinance work?
With a mortgage refinance, you replace your current home loan with a new one. Much like when you bought your home, you’ll have to meet the lender’s refinance requirements and go through the application and closing process. A record of paying your mortgage on time isn't enough; you'll need to be sure you can qualify for the new loan.
Though you don't make a down payment when you refinance, refinancing isn't free. You'll pay refinance closing costs, which generally run from 2% to 6% of the amount of your new loan. So for example, if you're refinancing $250,000, your closing costs will probably be between $5,000 and $15,000. Closing costs on a refinance include the origination fee, the appraisal and discount points.
Some lenders offer no-closing-cost refinances. With these loans, you don’t have to pay the closing costs upfront, but you will pay them one way or another. Lenders cover the cost of the refinancing by charging a higher interest rate or rolling the fees into the total loan amount. Increasing your loan amount bumps up the amount you'll pay monthly as well as over the life of the loan.
Refinancing also takes time, at least four to six weeks. Among other things, you'll go through underwriting, and the lender will get an appraisal. In most instances, this isn't a big deal; it's not like you're waiting to move. But if you were, say, looking to get money from a cash-out refinance to fix something urgent, a refi may not be your best bet. Depending on the amount you need, you might consider another way to finance major home repairs or renovations.
When should you refinance your mortgage?
There are several reasons you might choose to refinance your mortgage. In some cases, you may be able to accomplish more than one of these goals at once: for example, switching loan types and changing the loan's term. You might refinance to:
Lower your interest rate. If rates have dropped since you bought your home or your credit score has improved, a rate and term refinance may allow you to reduce your monthly mortgage payment. A lower interest rate could also save you a considerable amount of cash over the life of the loan.
Pay off your mortgage quicker. You can pay off your loan faster by refinancing from a 30-year mortgage to a 15-year mortgage, for example. While your monthly payments will rise, shortening your loan term could dramatically reduce the amount of interest you'll pay.
Tap into your home equity. With a cash-out refinance, you take out a new mortgage for more than your current loan balance. You receive the difference between the two amounts in cash, which you can use as you like. A cash-out refinance can be risky because you're getting a larger loan with your home as collateral, so it's generally considered safest to use the proceeds for something that improves your bottom line. For example, a major renovation could add to your home's value.
Switch from an adjustable-rate to a fixed-rate mortgage. If you want more payment stability, you can refinance your adjustable-rate mortgage to a fixed-rate mortgage. After a specified amount of time, the rate on the ARM may adjust higher, while the rate stays the same with a fixed-rate loan.
Eliminate private mortgage insurance. If you bought your home with less than 20% down, your lender likely required you to take private mortgage insurance, or PMI. This protects the lender in the event you default on the loan. If you’ve gained enough equity in your home, you can refinance to eliminate the PMI. However, it may make more sense simply to pay for an appraisal to cancel your mortgage insurance early.
Cancel FHA mortgage insurance. Refinancing is usually necessary to remove FHA mortgage insurance, which is determined by the amount of your down payment, not your equity. Going from an FHA loan to a conventional loan allows you to drop FHA mortgage insurance. But be sure you'll have at least 20% equity, so you don't end up paying private mortgage insurance.
Add or remove a borrower from the loan. Changing who's on the mortgage doesn't alter who owns the property — that's what the title or deed is for — but it does affect who's on the hook for the home loan. Generally, if you want to remove someone from your home loan and that person is still living, you'll have to refinance; this could be necessary in a divorce, for instance. The person or people remaining on the loan will have to be able to qualify for the refi without that borrower. It's a similar drill for adding someone to the mortgage. That person will need to qualify along with the current borrower.
Is it worth it to refinance?
There isn’t a standard rule about when it makes sense to refinance your mortgage. Some experts recommend refinancing if you can lower your mortgage rate by 1% or more. But a smaller drop may still make sense for you. Crunch the numbers with this mortgage refinance calculator.
Keep in mind that your credit score affects the interest rate you're quoted. The higher your credit score, the lower the mortgage rate you'll be offered.
When deciding if you should refinance, consider how long you plan to live in your home. If you plan to move away soon, you might not have time to recoup the costs of refinancing, sometimes called the break-even point. You break even on a refinance when the money saved from refinancing outweighs how much you spent on closing costs. Note that if saving money isn't your refinancing goal — for example, if you're taking cash out — this isn't a helpful metric.
And ask your lender about any prepayment penalties. While these penalties aren’t common, some lenders may charge them if you close the loan within the first three to five years of a mortgage.
» MORE: When is a good time to refinance?
Learn more about refinancing your mortgage:
Compare mortgage refinance lenders
How does a refinance work?
Home equity loan or HELOC vs. cash-out refinance
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How to Find Today's Mortgage Refinance Rates
To find today's mortgage refinance rates, you can use NerdWallet's comparison tool. By clicking or tapping "Refinance" in the filters above and entering a few details about your home loan, you can receive personalized rate quotes from multiple lenders within moments and without a credit check [].
Factors Influencing Mortgage Refinance Rates
Several factors can influence the mortgage refinance rate you will receive. One of the most significant factors is your credit score. Lenders consider your credit score when determining the interest rate for your refinance. It's important to check your credit report for any errors before refinancing and work on building your credit score by paying bills on time and keeping credit utilization low [].
Debt-to-income ratio (DTI) is another important factor. For a conventional loan refinance, lenders usually prefer a DTI ratio of no more than 36%. Your DTI is calculated by dividing the amount of debt you pay each month by your gross monthly income. Additionally, the type of refinance can affect your interest rate. Cash-out refinances, which involve borrowing against home equity and taking out a larger loan, are generally considered more risky and may have higher interest rates compared to rate and term refinances [].
To ensure you're getting the best possible rate, it's recommended to request quotes from multiple refinance lenders and compare the interest rate, annual percentage rate (APR), estimated closing costs, and other fees included on each Loan Estimate [].
Mortgage Refinance Process
When you refinance your mortgage, you replace your current home loan with a new one. Similar to when you initially bought your home, you'll need to meet the lender's refinance requirements and go through the application and closing process. It's important to note that refinancing isn't free, and you'll need to pay refinance closing costs, which generally range from 2% to 6% of the amount of your new loan. These costs include the origination fee, appraisal, and discount points. Some lenders offer no-closing-cost refinances, where the closing costs are either rolled into the loan amount or covered by charging a higher interest rate [].
The refinancing process typically takes four to six weeks and involves underwriting and an appraisal. It's essential to consider the timing of your refinance, as it may not be suitable for urgent financial needs. If you require immediate funds for major home repairs or renovations, you might want to explore alternative financing options [].
When to Refinance Your Mortgage
There are several reasons why you might choose to refinance your mortgage. Some common goals include:
- Lowering your interest rate: If mortgage rates have dropped since you bought your home or your credit score has improved, a rate and term refinance may allow you to reduce your monthly mortgage payment and save money over the life of the loan.
- Paying off your mortgage quicker: Refinancing from a longer-term mortgage to a shorter-term mortgage, such as from a 30-year mortgage to a 15-year mortgage, can help you pay off your loan faster and reduce the amount of interest you'll pay.
- Tapping into your home equity: With a cash-out refinance, you can take out a new mortgage for more than your current loan balance and receive the difference in cash. This can be used for purposes such as home renovations or consolidating high-interest debt.
- Switching from an adjustable-rate to a fixed-rate mortgage: Refinancing from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage can provide payment stability, especially if you anticipate interest rates to rise in the future.
- Eliminating private mortgage insurance (PMI): If you bought your home with less than 20% down, refinancing can help you eliminate PMI if you've gained enough equity in your home.
- Adding or removing a borrower from the loan: Refinancing may be necessary to remove or add a borrower to the mortgage, such as in the case of a divorce or adding a family member to the loan [].
Is Refinancing Worth It?
Determining whether refinancing is worth it depends on various factors, including the potential savings and your specific financial situation. Some experts recommend refinancing if you can lower your mortgage rate by 1% or more, but even a smaller drop in interest rate may still be beneficial. It's important to consider the costs of refinancing, including closing costs, and calculate the break-even point, which is when the money saved from refinancing outweighs the closing costs. Additionally, your credit score can affect the interest rate you're quoted, so it's worth considering how your credit score may impact the overall savings [].
Mortgage refinancing can be a complex process, but understanding the factors that influence refinance rates, the steps involved, and the potential benefits can help you make informed decisions. Remember to compare rates from multiple lenders, consider your financial goals, and evaluate the costs and potential savings before deciding to refinance your mortgage.
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