Home Insurance September 25, 2023—Rates Decrease – Forbes Advisor

September 25, 2023—Rates Decrease – Forbes Advisor

by Joshua Garcia

Refinancing your mortgage can be a smart move if you’re looking to lower your interest rate or monthly payments. However, it’s important to understand the current refinance rates and how they differ from mortgage rates. According to Forbes Advisor, the average rate on a 30-year fixed refinance is currently 7.85%, while a 15-year fixed refinance averages 6.97%, and a 20-year fixed refinance averages 7.74%.

It’s worth noting that refinance rates are typically higher than purchase loan rates due to the additional risk for the lender. This is especially true for cash-out refinance rates, which involve increasing your loan balance by tapping into your home’s equity.

When considering a refinance, it’s important to understand the costs associated with it. Similar to a home purchase loan, refinancing involves paperwork and a home appraisal. Additionally, there are closing costs ranging from 2% to 6% of the loan amount. This means that refinancing may only make financial sense if you plan to stay in your home for a significant period of time.

To determine if refinancing is a good option for you, it’s important to calculate the “break-even point.” This is the point at which the savings from a new mortgage begin to outweigh the closing costs associated with refinancing. Use a mortgage refinance calculator to determine if now is the right time for you to refinance.

While refinance rates are currently high, now may still be a good time to refinance if you can lower your monthly payment or secure a better interest rate. If your credit has improved since getting your current mortgage or if you switch to a shorter loan term, such as a 15-year mortgage, you may qualify for a competitive rate. Additionally, refinancing from a government-backed loan to a conventional loan with at least 20% equity can help you avoid private mortgage insurance or other fees.

To get the best refinance rates, it’s important to take steps to improve your credit score and lower your debt-to-income ratio. Keep an eye on mortgage rates, as they fluctuate frequently. Consider a shorter loan term, as they often come with lower interest rates.

It’s important to note that refinancing is not always the best option for everyone. If you can’t secure a better rate or reduce your monthly payment, the costs associated with refinancing, such as closing costs and a lengthy application process, may outweigh the potential benefits.

In summary, understanding the current refinance rates and determining if refinancing is the right move for you requires careful consideration. Assess your financial goals, calculate the potential savings, and explore your options with different lenders to find the best refinance rate for your situation.

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