Selling your house? Avoid advertising in winter
When is the best time to list your home for sale? There is general consensus about when you should list your home for sale.
With interest rates falling, homeowners are now trying to refinance their mortgages in droves in the hope of reducing their mortgage debt by trading for lower monthly payments.
The number of refinance applications rose nearly 60% this week compared to a year ago, while the average 30-year mortgage rate fell to its lowest level in over a year.
The decline in interest rates could also boost home sales.
According to Freddie Mac, the average 30-year mortgage rate fell to 6.47 percent this week, from 6.73 percent the previous week.
For comparison: a year ago it was about 7% and last autumn it was about 7.5%.
According to the Mortgage Bankers Association, applications for debt consolidation have increased 16 percent nationwide in recent weeks.
Due to lower inflation, mortgage rates have fallen in recent weeks, which could prompt the US Federal Reserve to cut interest rates.
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“If the recent decline in longer-term rates continues, we expect to see a further increase in refinance applications and subsequent mortgage refinance volumes this week,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
But don’t expect a refinancing boom. According to Realtor.com, over 85 percent of U.S. homeowners with mortgages have interest rates below 6 percent.
Is it a good idea to refinance a mortgage?
Financial experts say homeowners should wait until mortgage rates are at least 1% below their current rate to take advantage.
For example, a borrower who has a $400,000 mortgage with a 7.5% mortgage rate currently pays about $2,800 per month. At the current interest rate of about 6.5%, the payment would be about $2,525.
What pitfalls can lurk in debt restructuring?
In addition, refinancing typically incurs costs of several thousand dollars that must be taken into account when calculating total cost savings.
Also consider how long you will keep the home. Will it be long enough to offset the refinancing costs?
As with any loan, watch out for hidden costs, such as prepayment penalties.
What is the forecast for mortgage interest rates?
Economists expect interest rates to fall further this year, possibly to 6%.
If refinancing a mortgage doesn’t make sense now, it might later.
You can reach the reporter at [email protected] or 602-444-8040. Follow her on X: @CatherineReagor.
