Waiting to refinance your mortgage could cost you — here's why

Learn how much waiting to refinance your mortgage could cost you. (iStock)

With the Federal Reserve placing rates near zero in order to spare the U.S. from a complete economic fallout, mortgage rates are more competitive than they were pre-pandemic. In fact, these are the lowest mortgage rates seen since 1971.

If you are someone who always wants the absolute lowest price or best deal, now is the time to act. Depending on your personal financial situation (like your credit and debt-to-income ratio) now may be the best (and potentially only) time to get the lowest interest rates you’ll ever see.

Before you go through the process of refinancing your mortgage, make sure you shop around to secure the best interest rates possible. You can visit an online marketplace like Credible to get a sense of your refinancing options and save money today. Prequalify in just three minutes.

If you've been weighing a mortgage refinance, then you may want to get started on the process today. Here's why waiting to refinance your mortgage could actually cost you more money.

1. You could lose potential interest savings

Consumers who bought homes in the 1970s and 1980s may remember interest rates in the double digits. But most millennials and members of Gen X have been living in a “low rate” environment since the Great Recession of 2008. Since 2008, rates haven’t risen above 5%.

The reason current rates are making news is that they are the lowest seen in recent history. Freddie Mac's mortgage records began in 1971 and, with the lowest rates it has seen in almost 50-years as an indication of what we can expect in the future, rates can only go up from here.

Credible can streamline the refinance process by comparing rates and lenders at once. It's 100% free — and doesn't impact your credit score, so you can determine if you're ready to refinance without worry. Find your prequalified rates with the click of a button.


No one can predict interest rates, especially since they do fluctuate slightly from week-to-week. However, looking at rates all the way back to the 1970s gives hope that interest rates in the coming weeks and months will remain historically low. But you shouldn't wait to save.

Plus, closing costs on the new refinance loan may impact your overall savings. This is why it’s best to use an online mortgage refinance calculator to determine new monthly costs and if refinancing really does save money on your home loan.

2. 15-year mortgage rates could rise again

Saving on interest may not feel like money back in your pocket (especially during a pandemic), but the savings are substantial when calculating interest over the entirety of a 30- or 15-year mortgage. Those who refinance from a 30-year to 15-year mortgage may see an increase in monthly payments but can rest assured they are paying the least amount in interest.

  • In October 2019, the average interest rate on a 15-year mortgage was 3.14%. For a $400,000 loan, a borrower would pay $102,000 in interest over 15 years.
  • Today, the average interest rate on a 15-year mortgage is 2.125%. This comes to $67,300 in interest on the same $400,000 home.
  • Someone who wants to refinance to a 10-year mortgage today at 2.5%, would only pay $52,500 in lifetime interest on the loan.

Credible updates 30-year, 20-year and 15-year fixed rates daily, so you don't have to spend valuable time searching. To get a better idea if you can save money by switching to a 15-year mortgage today, enter some basic information into Credible's free online tools


3. You could be hit with a new fee

You may not want to deal with any major financial planning such as a refinance until after the holidays — but waiting could actually cost you more money. 

Refinance before Dec. 1, 2020, to avoid paying a new adverse market refinance fee. Mortgage companies are going to start charging a 0.5% fee to all refinance loans, so it's an added bonus if you get started on your refinance before Thanksgiving.

To avoid paying this new fee, get started with your mortgage refinance via the multi-lender marketplace Credible today. With Credible's free online tools, you can complete the entire origination process from comparing mortgage rates up to closing. Start the process now.


How to get the best mortgage refinance rates

In order to get lower refinance rates, make sure you check these four items off the list:

  1. Pay off debt to lower your debt-to-income ratio
  2. Work to improve your credit with on-time payments, cleaning up any errors, and keeping card balances below 30%
  3. Refrain from opening any new credit accounts
  4. Shop with at least three lenders to ensure you’re getting the most competitive rate

Rate shopping is easier than ever

Don't forget to shop! Even with current low rates, the interest rate you receive will vary by lender and by your current credit score. In order to obtain the lowest rate possible, head to Credible.

The process of refinancing your mortgage doesn't have to be painful. In fact, shopping around for mortgage and refinance rates is easier than ever — especially with online marketplaces such as Credible, where you can view multiple rates and lenders in one table.


Bottom line

Refinancing is not for everyone. The savings earned depends on your credit score, the interest rate received when you first borrowed, and the size of your mortgage. (Remember to take these important steps to protect your credit score during this time. Make sure you report any negative items on your credit report and check your credit score regularly).

A reported 18 million homeowners may be missing out on refinance savings. Current homeowners who want to take advantage of today’s low rates should use the extra time at home to investigate mortgage refinance options as a way to put more savings in the bank. 

Try Credible to explore mortgage refinance options and to compare rates and lenders.