Mortgage rates are trending downwards; following the Fed’s 0.50 percent rate cut in September, mortgage rates are now falling between 5.75 and 6.08%. And as interest rates fall, many homeowners that bought when rates were higher are wondering if now is the right time to refinance.
So, the question is: is it?
A recent article from realtor.com outlined things to consider when determining if now is the time to refinance your mortgage, including:
- Refinancing is extremely popular right now—but that doesn’t necessarily mean it’s right. If you’re thinking about refinancing, you’re not alone. According to the article, refinancing applications are up a whopping 127 percent year over year. But just because a lot of homeowners are refinancing right now doesn’t necessarily mean that you should refinance. Refinancing comes with costs—including application fees, appraisal fees, and title insurance—and in order for those costs to make financial sense, ideally, you’ll want to refinance when rates are 2 percent lower than your current mortgage interest rate.
- Refinancing can help you tackle debt. If you’re currently struggling with a lot of debt—like credit card debt, which carries a much higher interest rate—a cash-out refinance could give you the cash you need to pay off your credit cards and pay back the debt with a lower interest rate.
- Refinancing can be a good option to replace ARMs. With mortgage rates so high over the past few years, some buyers opted for adjustable rate mortgages (ARMs) to make their home purchase more affordable. But ARMs are unpredictable, so refinancing to get a fixed-rate mortgage (even if the rate is slightly higher than the ARM) could be a solid option for locking in your mortgage payments for the next 15 to 30 years
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