Mortgage refinance rates on Aug. 20, 2021: Rate moves lower – CNET [CNET]

In general, refinance rates for mortgages were varied Friday with one notable rate sliding lower. The average rate nationwide for a 15-year fixed-rate refinance moved up, while 30-year fixed refinance rates went down. At the same time, average rates for 10-year fixed refinances saw growth. Refinance interest rates are never set in stone — but rates have been historically low. If you plan to refinance your house, now might be an excellent time to get a good rate. But as always, make sure to first think about your personal goals and circumstances before refinancing, and shop around to find a lender who can best meet your needs.

Read more: How to finance a home renovation 

30-year fixed-rate refinance

The current average interest rate for a 30-year refinance is 3.02%, a decrease of 1 basis point from what we saw one week ago. (A basis point is equivalent to 0.01%.) One reason to refinance to a 30-year fixed loan from a shorter loan term is to lower your monthly payment. If you’re having difficulties making your monthly payments currently, a 30-year refinance could be a good option for you. In exchange for the lower monthly payments though, rates for a 30-year refinance will typically be higher than 15- and 10-year refinance rates. You’ll also pay off your loan more slowly.

15-year fixed-rate refinance

The average rate for a 15-year fixed refinance loan is currently 2.31%, an increase of 1 basis point over last week. A 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan. On the other hand, you’ll save money on interest, since you’ll pay off the loan sooner. Interest rates for a 15-year refinance also tend to be lower than that of a 30-year refinance, so you’ll save even more in the long run.

10-year fixed-rate refinance

The average rate for a 10-year fixed refinance loan is currently 2.35%, an increase of 2 basis points from what we saw the previous week. A 10-year refinance will typically feature the highest monthly payment of all refinance terms, but among the lowest interest rates. A 10-year refinance can help you pay off your house much quicker and save on interest. But you should confirm that you can afford a higher monthly payment by evaluating your budget and overall financial situation.

Where rates are headed

We track refinance rate trends using data collected by Bankrate, which is owned by CNET’s parent company. Here’s a table with the average refinance rates provided by lenders nationwide:

Average refinance interest rates

Rates as of Aug. 20, 2021.

How to find the best refinance rate

It’s important to understand that the rates advertised online may not apply to you. Market conditions aren’t the only factor in interest rates; your particular application and credit history will also play a large role.

Generally, you’ll want a high credit score, a low credit utilization ratio and a history of making consistent and on-time payments in order to get the best interest rates. You can generally get a good feel for average interest rates online, but make sure to speak with a mortgage professional in order to see the specific rates you qualify for. And don’t forget about fees and closing costs, which may cost a hefty amount upfront.

You should also know that many lenders have had stricter requirements when it comes to approving loans in the past few months. As such, you may not qualify for a refinance — or a low rate — if you don’t have a solid credit rating.

Before applying for a refinance, you should make your application as strong as possible in order to get the best rates available. You can do that by monitoring your credit, taking on debt responsibly and getting your finances in order before applying for a refinance. Also be sure to compare offers from multiple lenders in order to get the best rate.

When should I refinance?

In order for a refinance to make sense, you’ll generally want to get a lower interest rate than your current rate. Aside from interest rates, changing your loan term is another reason to refinance. Interest rates in the past few months have been at historic lows, but that’s not the only thing you should be looking at when deciding whether to refinance.

Make sure to consider your goals and financial situation, including how long you plan to stay in your current home. It’s helpful to have a specific goal for a refinance — such as decreasing your monthly payment or adjusting the term of your loan. Also keep in mind that closing costs and other fees may require an upfront investment.

Note that some lenders have tightened their requirements since the beginning of the pandemic. If you don’t have a solid credit score, you may not qualify for the best rate. Refinancing at a lower interest rate can save you money in the long run and help you pay off your loan sooner. But a careful cost-benefit analysis is necessary to confirm that doing so makes sense.