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30-Year Mortgage: Not Always the Right Choice for Refinancing

Even if the current rates are outstanding and you can better access federal programs, you want to refinance in the smartest possible way. Depending on your circumstances, a 30-year mortgage may not be the savviest option.

More people are refinancing again after a short decline in demand. This increase in activity comes following news that mortgage rates fell again for a second consecutive week last week.

With average interest rates again falling into the 2s (see below), demand for refinancing increased. Per the Mortgage Bankers Association, this latest refinancing blitz already resulted in a seasonally adjusted 5.5 percent rise in mortgage applications last week vs. the prior one.

Beyond the rates, there is also better access now to Freddie Mac and Fannie Mae refinancing programs. Regardless how great the rates are and how relevant the federal options are to your situation, make sure a 30-year term is right for your family.

Mortgage rate averages under 3 percent

Average interest rates from the Primary Mortgage Market Survey are currently as follows (as of November 10, 2021):

  • 30-year fixed-rate mortgage (FRM) — 2.98 percent (down 0.11 week-over-week; up 0.14 year-over-year)

  • 15-year fixed-rate mortgage (FRM) — 2.27 percent (down 0.08 week-over-week; down 0.07 year-over-year)

  • 5/1-year adjustable-rate mortgage (ARM) — 2.53 percent (down 0.01 week-over-week; down 0.58 percent year-over-year).

Access expands to federal refinancing programs

Many people who refinance in 2021 are doing so through RefiNow. This new program makes it a lot easier to get access to loans with strong terms.

Fannie Mae created RefiNow to help borrowers with moderate or low income, launching the project in June. More people are refinancing through this Fannie Mae offering now because the agency has loosened certain restrictions, such as allowing for a higher income.

Refi Possible, a similar program from Freddie Mac (also a buyer and seller of mortgages that is publicly traded and sponsored by the federal government), recently adopted similar changes. Because of the institutions' revisions, more people can qualify for refinances.

Is a 30-year refi best for you?

So if you do refinance, is a 30-year term best? A 30-year mortgage will get down your payments the most, but you can score a better interest rate with a shorter term. You can save tens of thousands in total interest paid over the life of the loan.

Are you considering a refi? It is critical to take this important step with a professional team you trust to look out for your best interests. At Best Advantage Mortgage, we take the time to get to know you so we can tailor a loan to help you achieve your goals. Meet our team!

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