Refinancing your mortgage can be a smart financial move to save money or achieve other financial goals. Mortgage refinance rates change daily, so it’s important to shop around to find the best rate. Currently, a majority of US homeowners have mortgages with rates below 6%, leading them to hold onto their existing mortgages instead of refinancing. However, experts suggest that borrowers with rates above 8% could benefit from refinancing, as they could potentially reduce their rate by a full percentage point.
Experts predict that mortgage interest rates will stabilize by the end of 2024, as inflation decelerates and the Federal Reserve plans to cut interest rates. However, the timing of these cuts depends on economic data and market response. Homeowners looking to refinance should keep an eye on daily rate changes and have a plan in place to take advantage of significant rate drops. Refinancing involves taking out a new home loan to pay off your existing mortgage, potentially with a different term or interest rate, or tapping into your equity through a cash-out refinance.
To find the best refinance rates, it’s important to have a strong application by getting your finances in order, using credit responsibly, and speaking with multiple lenders. Common reasons to refinance include securing a lower interest rate, switching to a different type of mortgage for more security, eliminating mortgage insurance, changing the length of the loan term, or tapping into your equity with a cash-out refinance. While a 30-year fixed-rate refinance will have lower monthly payments than a 15-year or 10-year refinance, it will cost more in interest over the long term. A 15-year or 10-year refinance can help you pay off your mortgage quicker, saving money on interest.
Overall, refinancing is a personal financial decision that depends on your specific circumstances. If you can lower your interest rate by at least 1% or have other financial goals in mind, such as paying off your mortgage faster or accessing equity, then refinancing may be a good option for you. Keep an eye on current refinance rates, make a plan to capitalize on rate drops, and consider speaking with a financial advisor to determine if refinancing is the right choice for you.
