Mortgage rates are at an all-time low, but if you’re thinking of refinancing, there are some things you should know. We are stretching your dollar with some tips.
“For the first time in history, an average 30 year fixed loan fell below 3%”
Rock bottom rates may be pulling buyers back into the housing market – sparking a surge in refinancing. Chief Business Correspondent Christine Romans says if you’re thinking of refinancing, know this: “It’s generally worth it if the new rate is about 1% lower than what you have now but it’s not just about the rate, it’s also about the fees. A refi usually costs about 2-3% of the loan amount. Shop around because there’s huge variation among lenders. Then take the total fees including closing costs, title appraisal and divide by your monthly savings. That tells you how many months before you break even on the refinance.”
So, should you wait in case rates drop further? Romans says it all depends on the health of the economy.
“Bottom line, there’s room for mortgage rates to come down further. Some experts say 2 1/2% or even lower is possible or they could just stay where they are for a while.”
Romans says the rates probably won’t come roaring back until the economy does. “And that may not happen until the coronavirus recession turns into a solid recovery.”
If you want to take a closer look there are free refinance calculators available online, just remember they’re not completely accurate. They’re only an idea of what it could look like for you.