When to Refinance: News and Financial Advice

Rising Mortgage Rates

Rising Mortgage RatesMortgage rates have been rising these past week. The average rate for the 30-year fixed mortgage climbed 10 basis points to reach 4.07 percent. The 15-year fixed mortgage, on the other hand, climbed 6 basis points to reach 3.22 percent. Finally, the 5/1 adjustable-rate mortgage rose to 3.24 percent, up by 9 basis points.

In contrast, refinance rate averages fell last week. The 30-year fixed refinance average fell 1 basis point down to 4.05 percent. The 15-year fixed refi fell 2 basis points down to 3.21 percent. The 10-year fixed refi, however, rose up by 3 basis points to 3.12 percent.

When to Refinance

With these rates, you may be wondering if you should refinance while rates are still at historic lows. To know if you should refinance your existing mortgage in Ogden, Utah, you may follow the general rule. You can refinance if you can lower your current mortgage’s interest rate by at least 0.75 or 1 percent. Of course, you can definitely refinance if you can reduce your current interest rate by more than 1 percent.

Look at Your Possible Savings

Now, to become more comfortable with the decision to refinance, you can calculate your possible savings from the refinance. You can do this by simply subtracting your possible monthly payment from the refinance rate from your current monthly payment. Big savings indicate that you should carry on with the refinance process.

Calculate When You Will Break Even

Subsequently, you can ask your lender how much your closing costs will be in a refinance. Once you have the amount in mind, you can know when you will break even when you divide your annual savings in the refinance from the closing costs. Of course, you need to live in the home for more than two years to make refinancing a good choice.

According to a study published in the Journal of Financial Economics, American homeowners lose $5.4 billion dollars because they did not refinance on time. You can avoid such a mistake by continuously monitoring rates and waiting for the perfect time to refinance.