3 Types of Homeowners Who Should Consider Refinancing Their Mortgage Right Now

When inflation Interest rates hit their highest level in decades in June 2022, and they quickly followed. Following multiple rate hikes by the Federal Reserve, the federal funds rate The interest rate hit its highest level in decades last July and has not been touched since. In this context, rates on debt products have also increased, mortgage rates reaching their highest level since 2000. Home buyers looking for their Dream house and owners looking to refinanceSo we were stuck with few options.

But the rate climate is slowly changing again. Back-to-back reports showing rate cuts inflation rate caused a slight drop in rates in anticipation of a federal funds rate reduction. And while many were hoping for several rate cuts in 2024, at least one still seems likely this year. These changes, while small, may cause some homeowners to reconsider refinancing. Before you take action, though, it’s helpful to know whether refinancing could actually make sense in your situation. To that end, we’ve compiled a list below of the types of homeowners who might want to consider refinancing their mortgage now.

Start by seeing what mortgage refinance rate you might qualify for here.

3 Types of Homeowners Who Should Consider Refinancing Their Mortgage Right Now

Considering refinancing your mortgage? It may be worth it if you fall into one or more of these three categories:

Homeowners who purchased their home in 2023

Mortgage Rates According to Freddie Mac, mortgage rates hit 7.79% in November 2023, but they currently average around 7%. If you purchased your home in late 2023, or at other times when mortgage rates were high, you may benefit from refinancing now. Just weigh the options carefully. closing costs compared to what you could save with a lower rate and plan to stay in the home long enough to recoup those costs; otherwise, it won’t be worth making the switch.

Start searching for mortgage refinance rates here now.

Homeowners who can get a rate one percentage point lower

Most experts say a mortgage refinance is worth it if you can get a new rate that’s one percentage point lower than your current rate. And for some homeowners, that may be the case right now, especially if you shop around for the lowest rate possible. half a percentage point less This could save you a lot of money, both on your monthly payment and on the interest you’ll pay over the life of the loan. So do the math now to see how much you could save.

Homeowners with a variable rate mortgage

A variable rate mortgage The interest rate is a rate that adjusts over time, sometimes up, sometimes down. While this may have been an advantage for some homeowners in recent years thanks to a lower-than-average rate, it may be less attractive today with rate cuts looming.

Given this possibility, some homeowners may benefit from refinancing their variable rate mortgage to a fixed rate mortgage. Not only can a fixed rate mortgage offer a lower rate, it will also provide predictability and reliability that a variable rate mortgage simply cannot provide.

The essential

While current mortgage rates are still much higher than what was available in 2020 and 2021, they are much better than what many buyers will get in 2023. So if you bought a home then, the savings that refinancing can provide today could be valuable to you. Similarly, if you can get a rate that is even a percentage point lower than what you already have, it may be worth acting now, and if you have an adjustable-rate mortgage, today’s slightly lower average rate may justify refinancing to a fixed version instead.

Have more questions? Learn more about your mortgage options online today.