Are you considering refinancing your mortgage in 2024 to take advantage of current interest rates? With rates subject to frequent changes, it’s essential to stay informed about current refinance rates and understand how to find the best deal. This guide will provide an overview of today’s average refinance rates, discuss whether refinancing is suitable for you, explore pros and cons, and offer tips for securing the best rate when you refinance your home loan.
Mortgage refinancing allows you to replace your existing mortgage with a new home loan, ideally at a lower interest rate, to reduce your monthly payments or shorten your loan term. Interest rates saw significant changes in 2023 and are expected to fluctuate in 2024, offering potential savings for many homeowners considering refinancing.
What Are Current Mortgage Refinance Rates Today?
As of January 2024, average nationwide refinance rates are:
- 30-year fixed-rate refinance – 6.375% APR
- 15-year fixed-rate refinance – 5.500% APR
Rates fluctuate daily and vary by lender. Always compare rates from multiple lenders to find the best deal. Aim for at least a 0.5% lower rate than your current mortgage rate to make refinancing worthwhile.
How Do You Know if Refinancing Your Mortgage is Right for You?
The first question to ask is whether you’ll benefit from refinancing your specific mortgage. Here are key factors to consider:
- Interest rate difference – Is your current rate at least 0.5-1% higher than today’s refinance rates? The bigger the rate drop, the more you’ll save.
- Loan type – Your savings may be greater refinancing adjustable-rate or short-term mortgages. But refinancing long-term fixed rates can still pay off.
- Time left – The longer you have left on your term, the greater potential for interest savings by refinancing.
- Closing costs – Will you recoup the upfront costs within 12-24 months of refinancing via lower monthly payments?
- Life plans – If you may move soon, refinancing may not pay off. But if staying put, refinancing can mean huge interest savings.
Crunch the numbers with a mortgage refinance calculator to see if you’ll come out ahead. Meeting 2-3 of the above criteria makes refinancing likely worthwhile.
What Are the Pros and Cons of Refinancing a Mortgage?
Before committing to a refinance, weigh the key pros and cons:
Pros
- Lower interest rate and monthly payment
- Shorter loan repayment term
- Opportunity to switch to fixed-rate
- Flexible cash-out for home projects
- Dropping mortgage insurance
- Building home equity faster
Cons
- Upfront closing costs
- Starting mortgage term over
- New origination fees
- Rates rising later and missing out
- Time-consuming documentation
- Potentially higher taxes/insurance
For many homeowners, the interest savings and lower payments outweigh the upfront costs of refinancing. But carefully consider both angles before moving forward.
What Types of Mortgage Refinances Are Available?
You have several options when refinancing an existing mortgage:
- Rate-and-term – Reduces rate/payment on same term length
- Cash-out – Takes equity out as cash; higher rate/payment
- Short-term – Goes from 30-year to 15-year mortgage
- No-closing cost – Lender covers closing fees by slightly higher rate
- Streamline – Limited docs for FHA/VA loans; low costs
- Cash-in – Brings money to closing to lower balance
Look for the refinance program that best fits your new mortgage goals and financial situation. A loan officer can explain the types of refinances available to you.
How Can I Get the Best Refinance Rate?
Follow these tips to ensure you get the lowest rate when refinancing:
- Check your credit score – Aim for at least a 740 FICO score
- Ask for multiple lender quotes – Compare interest rates and fees
- Negotiate with lenders – Leverage competing offers to get the best deal
- Lock your rate early – Protect against rising rates during the process
- Reduce your debt – Pay down credit cards and loans to lower DTI
- Shorten loan term – Reduce rate further with a 15-year mortgage
- Make a down payment – More equity can mean better refinance rates
- Adjust closing date – Rates change daily; time it right to snag the lowest rate
The more you prepare your finances, the better rate a lender can offer on your refinance. Shopping around is key to getting lenders to compete for your business.
What Closing Costs Should I Expect from Refinancing?
Closing costs for refinancing range from 2-6% of the mortgage loan amount. Typical fees include:
- Origination fee – 1-2% of loan amount
- Appraisal fee – $450-600
- Credit report fee – $50-100
- Title search and insurance – $700-1500
- Recording fees – $200-600
- Points – Optional; reduce rate further
Many lenders allow no-closing cost refinancing where they cover fees by slightly increasing your interest rate. This avoids high upfront costs.
Shop multiple lenders and compare total closing costs. Look for lenders offering closing cost credits and discounts to lower your out-of-pocket expense.
Should I Refinance My Mortgage in 2024?
If your goal is lowering your interest rate and monthly payments, 2024 remains a favorable time to refinance a mortgage. Here are signs it makes sense:
- You can reduce your rate by at least 0.5%
- You have at least 15-20% equity in your home
- Your credit score is over 740
- You plan to stay in your home 5+ years
- You can recoup closing costs within 2 years
- Current rates are at historic lows
Use a refinance calculator to see if you can save money over your loan’s remaining term. Meet with lenders to explore your refinance options. If the numbers look good, refinancing could put thousands of dollars back in your pocket.
The Bottom Line
Refinancing your mortgage can yield significant interest savings if you secure a lower rate. Evaluate current refinance rates against your existing loan and closing costs to see if refinancing your home this year makes financial sense. Act while rates remain low to maximize your lifetime savings.