The mortgage refinance rate is an average of fixed annual interest rates that work for 30 and 15 year mortgages. Many people choose to refinance, but is it actually worth it? Sometimes, it’s the only way to keep paying a value that got too expensive for your monthly income. But other times it could be worth it to wait a little bit before taking the leap and using a mortgage refinance rate for your home.
If you can understand how the mortgage refinance rate works and whether it’s actually a good idea for you financially you could get out of a lot of trouble. This simple number could change how much you pay for your home in total, so the ideal is to choose whether to refinance at all.
We prepared this guide for anyone who’s been looking at their mortgage refinance rate lately. Find out if the time to refinance has come, why you should do it and how to get the best interest rates in the market. Keep reading for a lot of tips!
For starters, should you use a mortgage refinance rate?
The greatest question for this whole article will be: should you actually use a mortgage refinance rate? Refinancing can be ideal for those who need more (or less) time to pay off their mortgage debts, but it can also make everything more expensive.
Mortgage rates have reached their lowest point in years in 2022. But you still have to think it through before taking the final step and going to a mortgage lender. Obviously, each person has their own reasons to refinance, but we’ll explain how the most common ones work and when they’re a good choice below.
How does mortgage refinancing work?
When you refinance a mortgage, your new lender pays off everything that you owe to your old lender. It works a lot like refinancing a personal or student loan. Afterwards, the new lender steps in to collect payments from you with a new contract, interest rate, fees and payment period.
This can be for the better. Some lenders offer a chance to get lower rates by shortening your repayment, for example. We’ll explain how each option works below, but remember that everything depends on what you qualify for. Having a great credit score will help reach your goals and the best numbers when it comes to mortgage refinance rates.
If you’re having trouble with that, maybe it’s time to check some of our guides on score improvement before actually trying to refinance.
1. Mortgage refinance rate to get a lower interest rate
Normally, you’ll look for a mortgage refinance rate that’s lower than your current interest rate. That means the homebuyer can pay less overall for their loan than they would with the previous lender. So good results for everyone and even saving up some money on the side.
The usual cliente looks for new interest rates that have a reduction of at least 2% to make it worthwhile. However, most mortgage lenders and financial advisors suggest that even a 1% decrease is enough to refinance.
If you’re thinking about refinancing and still have some doubts on whether you’re saving money, it’s a good idea to use a mortgage calculator. This way you can calculate how much you’re paying in total now and how it’d be with your new mortgage.
2. Refinancing to get a shorter payment time
This usually works best when you manage to also reduce your interest rates. If that’s the case, you can pay over a shorter term without much change to your monthly payments. Wouldn’t it be nice to go from a 30 year mortgage to a 15 year mortgage? That’s exactly our point here.
But you have to do the math before closing any deals. Sometimes even decreasing your interest rates won’t be enough to get lower monthly installments, especially if you already had low rates to begin with.
3. Mortgage refinance to convert ARM to a fixed rate
ARM (adjusted rate-mortgage) is a type of mortgage that most of the times starts with a lower interest rate. However, as the name already suggests, it suffers adjustments regularly. For the first few months (or even years), the homebuyer won’t really feel it, but the interest rates slowly climb and become less interesting.
By the time you realize you’re paying too much for that mortgage, it’s also time to look for a mortgage refinance rate. You’ll have to convert to a fixed rate to prevent further increases and get a lower percentage right away.
The opposite can also happen. Some periods in the economy cause lower interest rates for ARM. If that’s happening right now and you have a few months to pay off your loan, it’s great to convert. Anyone who doesn’t plan to stay in the house for long can also look for this choice since they won’t have to worry about interest rates in the next 30 years.
4. Refinance to consolidate debt
Some people try to refinance their home to consolidate credit card debt. While it may sound like a good idea at first, that isn’t really recommended by financial experts. Even high interest debts can be paid off in just a couple of years, but a mortgage will stick with you for 15 or 30 years and recuperating will be hard.
Adding a few years (maybe even doubling) your repayment time to pay off credit cards or student loans is rarely a wise decision. Remember that you’ll still have interest rates to deal with and even the fixed ones can amount to quite a lot over the next few decades.
Another big problem is the temptation to accumulate more debts once the refinancing is done. It’s easy to end up wasting even more with your credit cards and purchases over the next few months when there’s certainty your debt’s been consolidated. But don’t forget that you’ll still have to pay your mortgage over the next few years.
How to get a mortgage refinance rate?
Is there an easy way to compare a mortgage refinance rate before making a decision? Refinancing your home works the same way as your first mortgage, first you’ll have to choose a financial service provider that will look at your finances and determine your level of risk. This usually means getting a hard credit check on your history.
You’re free to check with different lenders and the best choice is to move away from the financing institution you used your first time. Most new loans reset your payment clock, so remember this before closing the deal.
Let’s say you already paid 3 years of a 30 years loan. After getting a new one, you’ll have 30 years to pay it off again. But this also works to get a shorter payment period in case you get, for example, a 20 or 15 year loan.
Best mortgage refinance lenders
2022 has been the year of the low mortgage refinance rate and there’s still time to use that in your favor. That’s why we picked some of the best financial services providers in the area to give you a starting point.
But remember: there isn’t one single option that’s best for everyone. You’ll have to check your credit worthiness, overall finances and how long there’s still left yo pay off your mortgage before choosing the best provider.
1. Flagstar Bank
Flagstar Bank is an excellent service to get a brand new mortgage or to refinance your old one. It works with plenty of categories and programs, as well as easy applications that you can complete online.
You can get an estimate quickly through Flagstar’s website that comes with mortgage insurance and other fees that apply. While its fees are slightly lower than most of what we find in similar banks, they aren’t the best in the market.
It could be a great choice for you, but the ideal is to look at those with similar services to make sure you’re paying the best price for your mortgage.
2. PNC Bank
If you just want to know the updated mortgage refinance rate then it’s easy, visit PNC Bank and take a quick look at its mortgage site. They routinely post the current interest rates online, so you don’t even have to fill in a pre application to know if it’s worth your time.
In case the rates seem interesting, and we guarantee that PNC Bank has some affordable options, then you can go on to the prequalification tool. There you’ll find out how much you’d have to pay monthly for a new mortgage before deciding.
3. Chase
As is the case with other services, such as loans and credit cards, Chase excels when it comes to mortgage refinancing. Its main perk is the ease with which you can pre qualify and manage your new mortgage. It also has affordable interest rates that might be better than the conventional, according to your credit worthiness, that is.
The customer service is also a great help for those who are a bit lost. They have a quick automatic service and human advisors to help you go through the refinancing process without much hardship.
Citibank Personal Loans 
Chase Personal Loan