The average rate on a 30-year fixed-rate mortgage in 2020 was 3.38%. If we look back 10 years, the average was 4.67% and if we look back even further to 2001, 20 years ago, the average 30-year fixed rate was over 7%.

With these numbers alone, it's easy to see the advantages of refinancing, especially for homeowners with mortgages from 10+ years ago. However, even if we look at trends from 2019, 2018, and on, it becomes pretty clear that rates today are near historical lows, making refinancing even more advantageous to homeowners.

A Freddie Mac survey from March 2020 found that borrowers who refinanced their 30-year fixed-rate mortgage to a similar 30-year fixed-rate saved over $2,800 in annual mortgage payments. The average borrower lowered their rate from 4.3% to 3.1% (Source).

So, yes, it really is that simple, the biggest advantage of refinancing your mortgage is that it can save you $1000's every year. However, saving money isn't the only advantage of refinancing, you can also use the opportunity to borrow money if you need it. By using your home's equity as collateral, you'll be able to borrow money at much lower rates when compared to a typical personal loan. If you're interested in cash-out refinancing, check out our list of the top-rated home equity lenders here.

While there are many benefits to refinancing and it can save you $1000's every month, the process isn't free and typically costs between 2% to 6% of your loan amount, depending on several factors including your location, credit score, amount of equity, loan size, and more. Lenders will also look at the type of mortgage you have as well as its current terms.

There are also other fees associated with refinancing and these can vary from lender to lender. In some cases, homeowners might be exempt from one or more of these fees but it is important to know refinancing does cost money and you should be prepared to have this money upfront. To tweak an old saying; it takes money to save money. Some common refinancing fees include:

• ∙ Application fee: $75 to $500
• ∙ Origination fee: Up to 1.5% of loan amount
• ∙ Credit report fee: $30 to $50
• ∙ Home appraisal: $300 to $400
• ∙ Home inspection: $300 to $500
• ∙ Flood certification fee: $15 to $25
• ∙ Title search and insurance fee: $400 to $900
• ∙ Recording fee: $25 to $250
• ∙ Reconveyance fee: $50 to $65

The type of refinancing we described above is called rate refinancing as it involved simply refinancing your mortgage to take advantage of lower rates. However, this is far from the only type of refinancing loan available.

Term refinancing is also extremely popular especially now with lower rates. It allows you to take a loan that had a term of 30 years and refinance it to a loan of 15 years. By doing this, you pay off your mortgage much faster while also benefiting from a lower rate. You might end up paying more per month but those monthly payments will end much sooner.

Other types of refinancing include:

• Refinancing to a VA loan
  If after applying for your original mortgage you or your spouse served in the military, you may be able to enjoy even lower rates by refinancing with a VA loan.
  
  
• Cash-out refinancing
  As mentioned, if you need cash for any reason (major purchase, home renovation, medical bills, etc) you can refinance and also borrow money using your home's equity as collateral. The rates you'll receive are much lower when compared to a personal loan.
  
  
• Cash-in refinancing
  If you have a sudden influx of cash and want to use it to lower your total mortgage amount, you can go through the cash-in refinancing process. Cash-in combined with rate refinancing could save you tons of money in the short and long term.

Initially, when shopping around for mortgage refinancing options, you may only need to provide a few personal and financial details such as the type of home you currently own, the location of the home, and details about your current mortgage. Once you apply, you'll need to provide documentation of your current mortgage and additional information about your financial information and income.

Even if you previously refinance your mortgage, you are still eligible to refinance again and enjoy the low rates that 2021 has to offer. One of our recommended lenders, LoanDepot, even offers a lifetime refinance guarantee so if you refinance with them once, they'll waive all lender fees appraisal fees on any future refinance.

So even if you've refinanced your mortgage in the past, don't let that stop you from refinancing yet again. You can still lower your rate, term, or simply use the refinance process to borrow money.

Not only can you refinance an existing mortgage loan, we highly recommend it! You can even check rates from different refinancing lenders to see just how much you can save.

When you refinance, you essentially use the new loan to fully pay back your original mortgage loan and subsequently start making (lower) payments on your new loan. It doesn't matter if your original loan is from a bank or any other lending institution, the refinancing lender will help take care of closing that loan and starting you off with a new one.

In today's pandemic-stricken world, you can even do this entire process online, without ever having to leave your home. Start by simply visiting one of the many online lenders or mortgage marketplaces we recommend. Many of these companies also have calculators so you can find out potential savings on interest before moving forward with the process.