Mortgage rates had already been trending lower before anyone in the United States had even heard of the Coronavirus. They finally reached a low of 3.29% during the first week of March, before drifting back up, and then down again. This rates roller coaster, actually led to a record setting increase occurring as well – 0.3% in less than a week! Now that we have seen the rates stabilize somewhat in the 3.3% range, is now the time for you to refinance your home?
Many homeowners have already made the move. According to the Mortgage Bankers Association, during the week ending April 10th, the number of people refinancing their mortgages was up 10% over the previous week, and up a whopping 192% compared to the same week in 2019. While some additional volatility can be expected throughout the rest of the year, the overall expectation is for rates to continue to trend lower, with some experts predicting a bottom of around 3%.
Should you make the move? If your current rate is 1% or more higher than the best rate you qualify for now, then it may be worth the time and effort involved for you to refinance. Of course, there are costs involved in refinancing, so you will need to weigh the benefits against incurred costs such as closing costs and the application, appraisal and title fees. Also, refinancing could mean extending the amount of time you will be making payments. This may not be a deal breaker if you are only a few years into your current mortgage. Otherwise consider a shorter loan term, such as 15 or 20 years rather than 30.
There are many benefits to refinancing, beyond just lowering your interest rate. If you have built up more than 20% equity, a refinance will help you eliminate Private Mortgage Insurance (PMI). If you currently have an ARM (Adjustable Rate Mortgage), you can take this opportunity to lock in a fixed, low rate that will not increase in the coming years.
So if you haven’t yet taken advantage of the lower rates, give some serious consideration to doing so within the next 3-6 months, before any economic changes signal an increase in rates could be on the horizon.
Check out this previous blog for more ways homeowners can save money!
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