Is it still a good time to refinance my mortgage?

Even though 2020s historically low interest rates are on the rise, it’s still a good time to refinance your mortgage and save thousands over your loan term. (iStock)

The coronavirus pandemic added stress over personal finances for many Americans. Nearly one-third of Americans reported that their investments were negatively impacted. Thankfully, the Federal Reserve’s lowering of the federal funds rate has given many the opportunity to safeguard one of their most important investments: their homes. 

When the federal funds rate was lowered, home mortgage interest rates fell to historic lows. These record low refinance rates offered homeowners an opportunity to save thousands over the life of their home loan and hundreds on their monthly payment. Although mortgage interest rates are starting to rise, those interested in refinancing your mortgage still have time to lock in historically low rates. 

If you are ready to refinance, see for yourself just how low current mortgage refinance rates are and explore your refinance options by visiting Credible where you can compare dozens of rates and mortgage lenders.


When applying for any new loan, it’s understandable to have concerns. Many homeowners are wondering if now truly is the right time to refinance their home loan, especially since mortgage refinance rates have started ticking back up over the last few months. Let’s look at a few of the vital questions homeowners are asking as they consider refinancing their mortgage loan in 2021.

Was 2020 the ideal time to refinance my home loan?

Generally speaking, yes. Mortgage rates hit record lows in 2020 and the absence of an adverse market refinance fee, a fee from Fannie Mae and Freddie Mac of 0.5% of the loan amount for mortgage refinance that lenders typically pass on to the homebuyer, only saved homeowners more money during their refinance. 2020 was an ideal time to move forward with a home loan refinance, but it’s important to realize that 2021’s mortgage rate levels have still been historically low and refinancing would benefit the average homeowner. 

While it’s unlikely that mortgage refinance rates will drop back down to the record lows of 2020, the Federal Reserve indicated that it plans on keeping the federal funds rate, a rate that indirectly influences the direction of mortgage interest rates, steady until 2022 or later. This means that lenders will continue offering low interest rates on mortgage loan refinances for the foreseeable future.

If you’re thinking of refinancing, consider using Credible. You can use Credible's free online tool to easily compare multiple lenders and see prequalified rates.


Why should I still consider refinancing my mortgage loan in 2021?

Although rates aren’t as low as they were in 2020, they’re still hovering near record-setting levels. It's unclear if and when we could see interest rates hit these low levels again. 

You should consider refinancing your mortgage loan if your credit score or debt-to-income ratio has dramatically improved since you first took out your home loan. You may also want to refinance if you want to stop paying private mortgage insurance, plan on cutting down your loan term or want to utilize the equity in your home or want a lower payment.

In order to take advantage of today's low rates, you can use an online mortgage refinance calculator to determine your potential new monthly payments and explore various mortgage lenders and rates. 


Are there any reasons why I shouldn’t refinance in 2021?

Most homeowners will benefit from low interest rates; however, refinancing your home is not the right financial decision for everyone. It doesn’t make sense to refinance if you can’t afford the closing costs or if you plan on moving soon - you won’t recoup the closing costs before you sell. You should also refrain from refinancing your home loan if you would lower your loan rate by less than 1%. 

Whether you are thinking about a personal loan, student loans, credit card or home loan, you can prepare by improving your credit score and lowering your total debt before applying. You should also shop around to compare rates from multiple mortgage lenders to ensure you’re getting the lowest rate available. Keep in mind that online lenders may be able to offer a lower rate than your local brick and mortar bank or credit union. 

Visit Credible to get in touch with experienced loan officers who are ready to answer all of your mortgage refinance questions. 

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