Current refi mortgage rates report for Jan. 7, 2026

Current refi rates data

Note that Fortune reviewed the most recent Zillow data available as of Jan. 6.

How mortgage refinancing works

Mortgage refinancing essentially involves paying off your existing home loan with a new one. Similar to when you applied for a mortgage the first time, you’ll need to apply for the refinance loan and meet lender criteria regarding your credit profile, proof of income, your debt-to-income (DTI) ratio, and more. 

This process generally means there will be a small hit to your credit score due to the hard inquiry. And, you should be aware there’s a risk of denial if you don’t meet the lender’s requirements.

What’s happening with mortgage rates in the market?

Some observers thought that mortgage interest rates would fall alongside the cuts made by the Federal Reserve to the federal funds rate late in late 2024. However, that didn’t happen, and interest rates remained stubbornly near the 7% mark—considering the nationwide average for 30-year, fixed-rate mortgages—for months. 

Rates did drop slightly toward the end of February, moving closer to 6.5% than had been seen in a while. Still, rates remain elevated well above pandemic-era lows, when some homeowners got mortgages with rates in the 2% and 3% range. 

A report from Redfin showed that as of the third quarter of 2024, 82.8% of homeowners carrying a mortgage had an interest rate under 6%. Many Americans have felt locked in, unwilling or unable to move or refinance while rates remained high.

There was finally some relief leading up to the Fed’s meetings in September and October, with rates trending noticeably downward ahead of the September meeting and inching downward leading into the October meeting. The central bank cut the federal funds rate at both of those meetings, with a quarter percentage point reduction each time—and made a third cut of the same amount in December.

When it might make sense to refinance your mortgage

Refinancing isn’t free, so it’s crucial to weigh the costs. One rule of thumb you’ll hear referenced is that it makes sense to refi if you can secure a rate at least a percentage point lower than your current rate. For example, if rates drop and you’re able to move from a 7% rate to a 6% rate, that’s worth seriously considering.

You might also want to refinance if you need to tap your home equity—this can be done via a cash-out refinance, which typically requires that you have built up at least 20% equity in your home.  

Refinancing can also help change your loan term or switch loan types, such as moving from an FHA loan to a conventional one to get rid of a lifetime mortgage insurance (MIP) requirement, or changing from an adjustable-rate mortgage (ARM) to a fixed-rate loan.

It can also be beneficial to refinance if you want to adjust your loan term. For instance, switching from a 15-year to a 30-year mortgage can provide smaller monthly payments, which might be more manageable if your financial situation has changed from when you took out the loan.

Costs to refinance your mortgage

Refinancing involves closing costs, typically ranging from 2% to 6% of the loan amount. For a $300,000 loan, costs might range from $6,000 to $18,000, for example. Some common costs include:

• Lender origination fees.
• Appraisal fees.
• Title search and insurance fees.
• Loan application fees.
• Survey fees.
• Attorney fees (if required in your state).
• Recording fees.
• Prepayment penalties (if applicable with your existing lender).

Different types of mortgage refi loans

Several types of refinance options exist, each suited to different goals:

• Rate-and-term refinance: This is what you’re looking for when you seek to lower your interest rate or change your loan term—though be aware if you shorten your repayment term this will almost certainly result in higher monthly payments.
• Cash-out refinance: Leverage your home equity by paying off your existing loan and taking out a larger loan, while receiving the difference in cash.
• No-closing-cost refinance: The lender covers closing costs in exchange for a higher interest rate. This is a refi to approach with educated caution, but could be worthwhile in certain cases. 
• Streamline refinance: Available for FHA, VA, and USDA loans, offering a simpler application process and oftentimes less paperwork. 

Refinancing with your existing lender vs. a new one

You’re not required to refinance with your original lender. Shopping around may help you find lower rates and possibly even better service. 

But, some lenders offer incentives, such as waiving closing costs, for staying with them. So you should broach the topic of refinancing with your existing lender before you make a decision. 

Lastly, know that if your mortgage has been purchased by Fannie Mae or Freddie Mac, you might be eligible for programs like Refi Now and Refi Possible.