Is Now the Right Time to Refinance?

April 18, 2020 4:52 am

The news is flooded with reports about the worldwide coronavirus and its impact on the economy. In response to the growing concerns on Wall Street, the FED made the rare move of cutting interest rates by half a point. As a result, many homeowners are now wondering if it could be a good time to refinance their existing mortgages to a lower interest rate.

First, it’s important to understand what the FED cut means to home lending programs. The FED cut represents a short-term interest rate cut and home loans are based on long-term rates. The good news, however, is that mortgage rates have been falling steadily since the start of 2020 to the lowest average in over 4 years, making a refinance very attractive. It help you determine if now is the right time to refinance your home loan.

Is Now the Right Time for You to Refinance?

Even with the lower interest rates, it’s important to understand what refinancing can mean to your specific situation, so you can make the best decision for you and your family.

  • What is your current rate? Traditionally, lenders suggest refinancing if the new rate is at least 2% lower.
  • How long is the new term? If you have 15 years left on your loan, it does not make sense to refinance into a new 30-year term, even with a lower interest rate.
  • What are the fees? Many lenders are offering no-cost refinancing, but read the fine print and make sure you analyze all the costs associated with the new loan.

Interest rates are falling. Talking to a lender about your options could save you thousands of dollars. Understanding these options will help you determine if now is the right time to refinance your home loan.

Don’t forget you can always call us for even more ideas and tips!