Mortgage rates are falling Down |Should you refinance your home now?
As mortgage rates experience a decline, the question arises: Is now the right time to refinance your home?
Considering a mortgage refinance? Explore your options as of December 6, 2023. Last year, a 40-year high in inflation prompted the Federal Reserve to implement aggressive rate hikes, resulting in a benchmark interest rate range reaching a 22-year peak of 5.25% to 5.50% in July. This surge impacted borrowers, especially those in the housing market, where mortgage rates hit their highest point since 2000, hindering homebuyers and refinance seekers.
Recent months, however, have seen a cooling of inflation to 3.2%, prompting the Fed to pause rate hikes. Consequently, mortgage rates have slightly decreased, prompting homeowners to question if it’s the opportune moment to refinance. Though rates remain higher than in 2020 and 2021, some may find them low enough to consider refinancing. Let’s delve into who should contemplate this financial move.
Who Should Refinance Now?
1. Owners with High Mortgage Rates
- If your current rate exceeds prevailing rates, refinancing can lead to monthly savings. However, consider the loan term; opting for a shorter duration might increase payments.
2. Owners with Private Mortgage Insurance (PMI)
- If your initial down payment was less than 20%, you likely have PMI. As you accumulate equity, refinancing can eliminate PMI, but assess closing costs and your long-term commitment to the property.
3. Owners with Adjustable-Rate Mortgages (ARM)
- ARMs, advantageous initially, become unpredictable when rates rise. Refinancing to a fixed rate offers stability and predictability in your budget.
Determining Your Eligibility
Before diving into a refinance, assess your mortgage terms, current rates, and the potential benefits. Calculate potential savings and scrutinize closing costs. Ensure that the property is a long-term investment to recover these costs.
The Bottom Line
While the allure of low rates may not be as potent as during the pandemic, recent rate adjustments offer hope. Owners with high rates, PMI, or ARMs may find value in refinancing. Crunch the numbers, understand the terms, and weigh the long-term benefits against the upfront costs. Refinancing can be a strategic financial move for those in the right circumstances. Explore your options wisely.
[Learn more about your mortgage refinancing options online.]