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How to know it’s time to refinance a mortgage

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Experts say that mortgage rates are reduced and that some landlords have made the conditions favorable to finance their re -finance.

The average 30 -year fixed wage mortgage was 6.58% for the week ending on Thursday, August 14th. in accordance with Freddie Mac.

According to Jessica Lautz, Deputy Chief Economist of the National Real Estate Association, the mortgage rates fell one and a half points from October 2023.

“This is an important development, Laut Lautz said.

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Lower mortgage rates often cause lower borrowing costs for housing loans. Many hosts have already jumped for the opportunity.

“Refinance applications rose to their strongest speeds in four weeks,” Mortgage Bankers Association and Vice Economist Vice Economist. in question In the August 6 report. The share of refinance applications has increased to approximately 42% of the total applications that have been the highest level since April.

Although most landlords have mortgage ratios to benefit, approximately 18.8% of unpaid mortgages are 6% or higher than interest rates. in accordance with Realtor.com.

Experts say that the landlords who have purchased their property in recent years when their rates have high rates can consider financing again.

“A much more common mistake is that people do not realize that they have the opportunity to finance and benefit from it,” Redfin’s President of Economic Survey, ” He said.

Why Mortgage Rates decrease

Mortgage rates are decreasing in recent months. In May, the 30 -year mortgage rate reached 6.89%. per Freddie Mac data. The ratio has been on a rugged slope since then.

This keeps the interest rates of the Federal Reserve by 4.25-4.5% since December.

. federal fund ratio It determines what banks charge each other for lending overnight and directly affect the borrowing and saving rates for the Americans.

However, mortgage rates do not follow the federal fund rate determined by the Central Bank. Instead, according to experts, they closely follow the decreasing 10 -year treasury returns due to the latest weakness in economic data.

“The bond market is super -sensitive and reacts to the data immediately,” William Raveis Mortgage Vice President Melissa Cohn said. He said.

Zhao has the possibility of reducing interest rates in September, but the bond market may have already been priced in this decision.

In general, experts admit that it is worth paying attention to where the rates are, and that it accepts to identify the opportunities to finance.

“People should start paying attention to where the rates go, Coh Cohn said.

When it makes sense to finance a mortgage

As mortgage rates decrease, a mortgage with an interest rate of more than 6% is worth considering re -financing, and especially if 7% or higher.

However, consider your plans before starting the process: If you expect to live or have a property for a few more years, it is more logical again.

This is because the financing of a mortgage is not free – there are closing costs and some fees that come with it, and you want to depreciate the costs during the period you expect to be at home.

If you plan to continue the house for more than a year, it makes sense to financing again. However, if you plan to sell your home in the next six months, Zhao said.

In general, the financing costs will depend on where you live and the size of the loan.

You can expect to pay between 2 and 6% of the new credit balance, in accordance with Bankrate. For example, if you are financed a mortgage of $ 150,000, you can pay from $ 3,000 to $ 9,000 for closing costs.

Also, you want to make sure that the proportions of Refi are “enough” to see real savings, Cohn said Cohn.

There are different rules that the things or proportions that are accepted as “money” fall sufficiently. Typically, however, if interest rates are less than 50 basis points lower than your current ratio, you should see that Zhao said.