Refinancing rates fall for homeowners: Refinancing rates for August 28, 2024
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Since 2022, refinancing activity has slowed in response to rising mortgage rates. But with inflation normalizing and the Federal Reserve positioning itself to cut rates next month, mortgage rates should gradually decline. As that happens, more homeowners, especially those with high interest rates on their mortgages, will benefit from refinancing.
Today’s average refinancing rates
Mortgage
Refinancing
As mortgage rates drop, you may choose to refinance your mortgage to a new one with a lower interest rate. Start by shopping around and comparing multiple offers to get the lowest rate. Enter your information here to receive a customized quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool includes partner rates from lenders that you can use when comparing multiple mortgage rates.
Current trends in refinancing rates
Mortgage refinance rates have moderated in response to cooler inflation and labor data. Still, the majority of homeowners, who have mortgage rates well below 6%, would not benefit from refinancing at current rates.
Despite the recent decline, experts do not expect another refinancing boom like the one we saw in 2020 and 2021, when mortgage rates were historically low.
“This is not low enough to cause an increase in refinancing activity, but if rates fall below 6% that would start to change,” he said. Matt Graham from Mortgage News Daily.
Refinancing rate forecast for 2024
According to experts, slowing inflation and expected Federal Reserve rate cuts should push mortgage rates closer to 6% by the end of 2024. But a lot can happen to the economy in the meantime.
While the Fed has not adjusted rates since last summer, a September rate cut now appears inevitable, Melissa Cohnregional vice president of William Raveis Mortgage and a member of CNET Money’s expert review committee.
If you’re considering refinancing, remember that you can’t time the economy: Interest rates fluctuate by the hour, day and week, and are affected by a variety of factors. Your best bet is to keep an eye on daily rate changes and have a plan in place to take advantage of a large enough percentage drop, Graham says.
Refinancing 101
When you refinance your mortgage, you take out another mortgage that pays off your original mortgage. With traditional refinancing, your new mortgage has a different term and/or interest rate. With cash-out refinancing, you tap into your home equity with a new loan that is larger than your existing mortgage balance, allowing you to pocket the difference in cash.
Refinancing can be a great financial move if you get a low interest rate or can pay off your mortgage in less time, but consider whether it’s right for you. Lowering your interest rate by 1% or more is an incentive to refinance, which can significantly reduce your monthly payment.
Choosing the right refinancing type and term
The rates advertised online often require specific conditions to qualify. Your personal interest rate is affected by market conditions and your specific credit history, financial profile, and application. A high credit score, low credit utilization ratio, and a history of consistent and timely payments will generally help you get the best interest rates.
30-year fixed rate refinancing
The average 30-year fixed refinance rate is currently 6.44%, down 8 basis points from a week ago. (A basis point is equal to 0.01%). A 30-year fixed refinance typically has lower monthly payments than a 15- or 10-year refinance, but it takes longer to pay off the loan and will typically cost you more in interest in the long run.
15-year fixed rate refinancing
The current average rate for 15-year refinances is 5.92%, down 6 basis points from what we saw last week. While a 15-year fixed refinance will likely increase your monthly payment compared to a 30-year loan, you’ll save more money over time because you’ll pay off your loan faster. Additionally, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.
10-year fixed rate refinancing
The average 10-year fixed refinance rate is now 5.93%, down 3 basis points from what we saw last week. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all the refinance terms. A 10-year refinance can help you pay off your home much faster and save on interest, but make sure you can afford the higher monthly payment.
To get the best refinance rates, make your application as strong as possible by getting your finances in order, being responsible with credit, and monitoring your credit regularly. And don’t forget to talk to multiple lenders and shop around.
Reasons to refinance
Homeowners usually refinance to save money, but there are other reasons to do it as well. Here are the most common reasons why homeowners refinance:
- To get a lower interest rate: If you can get an interest rate that is at least 1% lower than the interest rate on your current mortgage, it may make sense to refinance.
- To change mortgage type: If you have a variable interest rate mortgage and want more security, you can transfer your mortgage to a fixed interest rate mortgage.
- To cancel mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance it to a conventional loan once you have 20% equity.
- To change the term of a loan: Refinancing to a longer term can lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
- To access your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
- To take someone off the mortgage: In the event of a divorce, you can apply for a new mortgage in your own name and use the money to pay off your existing mortgage.