Refinancing your mortgage can unlock substantial savings—especially when mortgage refinance rates are near historic lows. Whether you’re switching from a 30-year to a 15-year term or simply lowering your monthly payment, this guide walks you through every step.
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| Comparing mortgage refinance rates online |
1. Monitor Current Mortgage Refinance Rates
Before you start, check today’s average mortgage refinance rates for both 15- and 30-year terms:
| Loan Term | Average Refinance Rate (APR) | Typical Closing Costs |
|---|---|---|
| 15-Year | 4.00% – 4.25% | 2% – 3% of loan amount |
| 30-Year | 4.25% – 4.50% | 2% – 3% of loan amount |
Rates fluctuate daily, so use a reliable source—like a refinance calculator or lender portals—to get live quotes.
2. Calculate Your Break-Even Point
Refinancing comes with fees (appraisal, origination, title). To decide if it’s worth it:
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Estimate costs: 2%–3% of your outstanding loan.
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Determine monthly savings: subtract your new payment from the old.
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Divide costs by savings: gives the break-even period in months.
For example, $4,000 in fees ÷ $200 monthly savings = 20 months. If you plan to stay in your home beyond that, refinancing makes sense.
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3. Shop Multiple Lenders
Don’t settle for the first quote. Compare at least three:
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National banks (e.g., Wells Fargo, Chase)
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Credit unions—often lower fees for members
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Online lenders (e.g., Rocket Mortgage)
Ask each for “good-faith estimates” so you can compare mortgage refinance rates, closing costs, and timelines side by side.
4. Explore No-Closing-Cost Options
If upfront fees deter you, consider a no-closing-cost refinance:
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Higher interest rate in exchange for waived fees
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Good if you plan to sell or refinance again within a few years
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Always calculate long-term cost differences before choosing
5. Lock in Your Rate and Complete the Application
Once you find a competitive mortgage refinance rate:
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Lock your rate—typically for 30–60 days.
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Submit documentation: income proof, credit report, title.
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Underwriting and appraisal: lender verifies home value.
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Closing: sign final papers and pay any remaining fees.
After closing, your new loan replaces the old one and you begin enjoying lower payments.