There has been a lot of talk in the media about mortgage rates, so we want to make sure you understand the recent developments and what it means for you. In just a few months in 2022, mortgage rates more than doubled, jumping from less than 3% to well over 7%. Essentially the emergency brake was pulled on the housing market. However, the markets are resilient and mortgage rates have recently retreated and are now at their lowest levels since September, giving anxious homebuyers an opportunity to lock in more attractive rates and increase their purchasing power.
Low-interest rates are a great opportunity to refinance your mortgage and save more money over the life of the loan. Refinancing can help you pay off your mortgage faster, reduce the amount of interest you pay, and even lower your monthly payments. But it’s important to understand how refinancing works and when it’s the best option for you. Let’s take a look at what you need to know about refinancing. When Is It Best To Refinance?
When it comes to refinancing your mortgage, timing is everything. If you have an adjustable-rate mortgage (ARM) or a higher-than-market interest rate on your fixed-rate loan, it may be beneficial to look into refinancing. Additionally, if you plan to stay in your home for many years and want to reduce your monthly payments, refinancing into a longer-term loan can be advantageous.
It may also be beneficial to refinance if you want to consolidate debt or take out cash from the equity in your home. Refinancing could make more sense than taking out a second mortgage or a home equity line of credit (HELOC). Keep in mind, though, that refinancing is not always the best option. Why Refinancing makes sense today? And why it is the best time to lock in that dream property. Mortgage Rates are at their lowest since September 2022. According to an article from CNBC, Last week saw the lowest 30-year mortgage rate in 18 weeks – a record 6.15%. Thanks to this dip, potential homebuyers who had put their dreams on pause due to high mortgage interest rates may now find relief and renewed hope.
The Federal Housing Finance Agency (FHFA) has brought more good news with changes to its fee structure that will reduce loan costs for certain borrowers while increasing it for others, starting May 1, 2023.
On top of this, average home prices in the U.S., as reported by Redfin, have been gradually decreasing since peaking in May 2022.
With lower mortgage rates and upcoming fee changes, now is a great time to reconsider any plans you’ve put on hold and determine if this is the right moment to buy a house!
Here are Factors To Consider When Refinancing
In addition to understanding when it’s best to refinance, there are several factors that should be considered before taking out a new loan. These include closing costs (which can range from 2% - 5% of the loan amount), additional fees associated with refinancing (such as loan origination fees, appraisal fees or title insurance fees), and whether or not you plan on staying in your home long enough for the total savings from refinancing outweigh any associated costs.
The Benefits Of Refinancing During A Low-Rate Period
Refinancing during a low-rate period offers several benefits, including reducing monthly payments and potentially paying off your mortgage faster by extending the length of the loan term. Additionally, if you haven't been able to build up much equity in your home due to making smaller payments each month under an ARM loan, refinancing into a fixed-rate loan can allow you to make larger payments toward building equity while still keeping your monthly payments manageable. Bottomline.
Recent weeks have seen a drop in mortgage rates, which could result in more affordable future payments. Changes are coming to conventional loans in the form of modified fees may save you money or add extra expense depending on your situation. If you're currently in the process of buying a home, make sure you speak with your lender to discover exactly how these changes will affect you.
Refinancing during low-rate periods is an ideal way for homeowners to save on mortgage payments and build equity more quickly. It is important to research all available options carefully before deciding if refinancing is the right financial move for the future. Factors such as closing costs and additional fees should be taken into consideration in order to determine if a good deal is being made. Our team of over 20 professionals is available to help with any real estate needs, whether you're a first-time home buyer or an experienced buyer wishing to upgrade. Get in touch with us today to get started!
Proven Realty
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