Compare Today’s Refinance Rates | U.S. News

U.S. News Expert Insights, Week Ending July 8

Mortgage Rates Rise as Iran Conflict Resumes

“National average mortgage rates increased this week, according to Zillow data provided to U.S. News. For purchase loans, the 30-year fixed rate increased to 6.669%, up from 6.573% the week prior. Interest rates for mortgage refinancing also increased, averaging 6.76% for the 30-year term and 5.78% for the 15-year repayment period.

“Mortgage rates were driven higher by the U.S.-Iran war, as both sides traded strikes over the July 4 holiday weekend. Renewed fighting in the Middle East has caused oil prices to rise, and rising oil prices can cause inflation to reverberate throughout the entire economy as items become more expensive to manufacture and transport. Mortgage interest rates track 10-year Treasury yields, and the bond market is highly sensitive to inflationary pressures.

“Until a more permanent resolution is reached between the U.S. and Iran, mortgage rates are likely to stay higher for longer. In an environment of elevated mortgage rates, consumers who are looking to buy a home or refinance their mortgage could get more favorable pricing by shopping around with multiple lenders. It’s also a good time to lock in a mortgage rate given all the upward pressure on bond yields.”

– Erika Giovanetti, U.S. News Consumer Lending Analyst

Mortgage rates have dropped by about a percentage point since early 2025, which could be a good opportunity to refinance for those homeowners who bought when mortgage rates were high in 2022 and 2023.

Experts predict that mortgage rates will hover between 6% and 6.5% in 2026 and 2027, although the forecast is not guaranteed. Refinancing now could mean locking in a higher rate than what will be available several months from now, while waiting to refinance comes with the risk that mortgage rates could stay higher for longer than expected.

It’s impossible to identify a universally perfect time to refinance, since that will vary from one borrower to the next.

If you’re considering a refinance, you will need to determine whether it makes sense for your situation. That involves looking at your financial goals, considering how long you plan to stay in your home and checking current mortgage rates. Here are some situations when refinancing might be a good idea:

You qualify for a lower interest rate. You may get a good refinance rate if market rates are dropping or your credit score improved since you took out the original mortgage. Some mortgage experts say a rate-and-term refinance makes financial sense if you can lower your rate by about three-quarters of a percentage point. But even shaving half of a point off your rate may be a good move if it helps you lower your monthly payments and you plan to stay in the home for the long term.

However, you may wind up paying more interest over the life of the loan if you lengthen the term in the refinance. Use a mortgage calculator to determine if you’ll come out ahead.

Your home equity has increased substantially. If you’re sitting on a lot of equity and want to borrow against it, you may decide to do a cash-out refinance. This involves taking out a new mortgage for more than you owe, paying off the old loan and keeping the difference in cash.

Lenders usually require you to have a certain amount of equity for a cash-out refinance – and “with rising home values, you may have enough,” says Thomas Bullins, a mortgage sales manager at AmeriSave Mortgage. The money you borrow may be used for anything, such as financing home improvements, paying off debts or funding large purchases. 

You’re removing a co-borrower from the loan. If you took out the mortgage with a co-borrower, such as a spouse, relative or friend, both of you are equally responsible for making mortgage payments per your loan contract. When you want to remove a borrower, such as in the event of a divorce, you may need to pay off the loan. Refinancing puts the mortgage in your name and pays off the old debt with the new loan.

You want the benefits of a conforming loan. Government-backed loans, including FHA loans and USDA loans, typically come with perks such as low down-payments and flexible lending requirements. But they can have expensive downsides. For example, borrowers may need to pay mortgage insurance throughout the life of the loan.

If you qualify to refinance to a conforming loan, you will be able to remove mortgage insurance once your loan-to-value ratio reaches 80%. Refinancing to a conforming loan with more favorable terms – and eventually dropping mortgage insurance – may help you save money.

You want to combine a first and second mortgage. Some homeowners take out a second mortgage in the form of a home equity loan or line of credit, also called a HELOC. But if having multiple payments is confusing, your interest rates are high or one loan has an adjustable rate, you may consider combining the loans using a rate-and-term refinance. This can help you simplify your finances and potentially save money.

You want a fixed rate. Some home loans have an adjustable rate, where the interest rate is fixed for a certain period of time and then may change regularly. For instance, a 5/1 adjustable-rate mortgage has a fixed interest rate for five years and then may change once a year for the rest of the loan term.

If you plan on living in your home for just a few years and want the lowest rate initially, an adjustable-rate mortgage could be a good choice.

Refinance rates move in tandem with purchase rates. “That means if mortgage purchase rates go down, you can assume refinance rates will decrease as well, and vice versa,” Bullins says.

Several factors go into the rate you receive. Generally, a high credit score, low debt-to-income ratio, strong employment history and substantial home equity can help you get a low refinance rate. You can find the lowest refinance rate on the market by following a few steps.

Compare mortgage refinance rates. Getting quotes from multiple lenders is the best way to find the lowest mortgage refinance rate. Rates can vary by lender, borrower and location, and even a small difference can add up over time.

For instance, a refinance rate of 5% can save you $53 a month compared with a rate of 5.5% on a loan balance of $200,000 with a 15-year term. Over the life of the loan, you save about $9,465.

Buy points to lower your rate. Discount points are fees you can choose to pay your lender in exchange for a lower interest rate. This is sometimes known as buying down the rate.

One point costs 1% of the loan amount, meaning one point on a $200,000 mortgage would cost $2,000. Each point typically reduces your rate by about a quarter of a percentage point, which can lower your monthly payments. You’ll need to calculate your break-even point to see if buying points makes sense for your situation.

Improve your credit. Having good credit, which generally means your credit score is 670 or higher, may help you get a lower refinance rate. You may be able to raise your credit score by taking a few simple steps.

Visit AnnualCreditReport.com to request your free credit reports from the three credit bureaus. Look for errors that can bring down your scores, and dispute any errors you find. Paying down your debts and consistently paying your bills on time may also help boost your credit scores.

Lenders charge closing costs to refinance just as they would for a purchase mortgage.

You can expect to pay between 2% and 6% of the loan amount to refinance your mortgage. On a $300,000 mortgage, that could be $6,000 to $18,000, depending on the lender’s fees, your location, discount points paid and other factors.

The best way to estimate your refinance costs is to get a quote from a reputable bank or credit union. Ask for an estimate of your new interest rate and monthly payment as well as a complete list of refinancing fees. Once you have these numbers, use a refinance calculator to determine your breakeven point, which is when your savings equal costs.

Some lenders may advertise no-cost refinance loans or no-closing-cost loans. Your lender will cover the closing fees on your loan but will recoup its costs in some way. For instance, a lender may charge you a higher interest rate to cover the cost of making the loan or bake the closing costs into your loan amount. With either method, you won’t pay closing costs but will have a higher monthly payment than if you did.