Should you refinance your mortgage? 30-year fixed rate is 6.35%: Rates, costs and loan options explained
The average interest rate for a 30-year fixed mortgage refinance is now 6.35%, according to Zillow data. A refinance means replacing your current home loan with a new loan, usually to get a lower interest rate, reduce monthly payments, change the loan period, or use your home’s equity.
Current mortgage refinance rates
For conventional refinance loans, the average rates are:
- 30-year fixed: 6.35%
- 20-year fixed: 6.21%
- 15-year fixed: 5.94%
- 10-year fixed: 5.97%
For jumbo refinance loans, the average rates are:
- 30-year fixed: 6.50%
- 15-year fixed: 6.27%
For FHA refinance loans, the average rates are:
- 30-year fixed: 6.27%
- 15-year fixed: 5.75% to 6.25%
For VA refinance loans, the average rates are:
- 30-year fixed: 5.750%
- 15-year fixed: 5.375%
How mortgage refinancing works
When you refinance, your new loan is used to pay off your old mortgage, leaving you with a new loan under new terms. You must qualify for the new loan just like when you first bought your home. Lenders will check your credit score, income, debt-to-income (DTI) ratio and other financial details before approving the refinance, according to Fortune.
Applying for refinancing usually includes a hard credit inquiry, which may temporarily lower your credit score. Your application can also be rejected if you do not meet the lender’s requirements.
Why mortgage rates are still high
Many experts expected mortgage rates to fall after the Federal Reserve cut interest rates several times starting in late 2024. Despite those Fed rate cuts, 30-year fixed mortgage rates stayed close to 7% across the United States for a long time. Current mortgage rates remain much higher than during the COVID-19 pandemic, when many borrowers locked in rates between 2% and 3%.
According to Redfin, about 82.8% of homeowners with mortgages had interest rates below 6% in the third quarter of 2024. Because so many homeowners already have very low rates, many are choosing not to move or refinance. This is known as the “lock-in effect.”
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Mortgage rates started falling toward about 6% during August, September and October 2025. That decline happened because financial markets expected the Federal Reserve to continue cutting interest rates. The Federal Reserve cut its benchmark interest rate by 0.25 percentage points in September 2025, according to Fortune. The Fed made another 0.25 percentage point rate cut in October 2025. The central bank announced a third quarter-point rate cut during its December 2025 meeting.
Mortgage rates moved higher again in March 2026 after the Trump administration launched Operation Epic Fury in Iran at the end of February. The military action increased gas prices and created uncertainty about the U.S. economy, putting upward pressure on mortgage rates. Mortgage rates briefly appeared ready to fall after the U.S. and Iran announced a ceasefire in June 2026. However, rates remained elevated overall and edged higher again in July 2026 as the ceasefire appeared to weaken.
When refinancing can make sense
Experts say refinancing can be worth considering if you can lower your interest rate by around one percentage point. For example, if your current mortgage rate is 7% and you qualify for 6%, refinancing could save you money over the life of the loan, as stated by Fortune.
Some homeowners refinance to take cash out from the value they have built in their home through a cash-out refinance. Most lenders require homeowners to have at least 20% home equity before approving a cash-out refinance. Refinancing can also help borrowers switch from an FHA loan to a conventional loan to avoid FHA lifetime mortgage insurance premiums (MIP).
Some homeowners refinance from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage to avoid future interest rate increases. Borrowers can also change the length of their mortgage during refinancing. Moving from a 15-year loan to a 30-year loan usually lowers monthly payments but increases the total interest paid over time.
How much refinancing costs
Refinancing is not free because borrowers must pay closing costs. Closing costs usually range between 2% and 6% of the total loan amount. For a $300,000 mortgage, closing costs could range from about $6,000 to $18,000, as noted by Fortune. Common refinancing costs include lender origination fees. Borrowers may also pay appraisal fees.
Title search and title insurance fees are usually part of refinancing costs. Loan application fees may also apply. Some borrowers may need to pay survey fees. Attorney fees may be required in some U.S. states. Recording fees charged by local governments may also be included. Some homeowners may have to pay a prepayment penalty if their existing mortgage includes one.
Different types of refinance loans
A rate-and-term refinance is the most common type and helps borrowers lower their interest rate or change the loan length. Choosing a shorter loan term often reduces the interest rate but usually increases monthly mortgage payments. A cash-out refinance lets homeowners borrow more than they currently owe and receive the difference in cash.
The cash from a cash-out refinance can be used for home improvements, paying off expensive debt or other financial needs. A no-closing-cost refinance allows borrowers to avoid paying closing costs upfront, but lenders usually charge a higher interest rate instead. Fortune says borrowers should carefully compare this option because the higher rate may cost more over time. A streamline refinance is available for existing FHA, VA and USDA loan holders. Streamline refinancing usually requires less paperwork and offers a faster approval process.
Should you stay with your current lender?
Homeowners do not have to refinance with the lender that gave them their original mortgage. Shopping around with different lenders may help borrowers find lower interest rates or better customer service. Some lenders offer benefits like reduced or waived closing costs to existing customers who refinance with them.
Fortune report notes, borrowers should compare offers from multiple lenders before making a final decision. Homeowners whose mortgages are owned by Fannie Mae or Freddie Mac may qualify for refinance assistance programs such as RefiNow and Refi Possible.