Home prices in Seattle have risen steadily over the last few years, despite dipping over the past few months. This put a lot of local homeowners in a good position to refinance.
That, coupled with the fact that mortgage rates were relatively low, boosted the benefits of refinancing.
But what about now? Rates are much higher today than they were a couple of years ago, so should you still consider refinancing? Here’s the million-dollar question: Can you refinance your Seattle home in 2024, and still save money? Or has the “window” closed for now?
That will depend on several factors, including the difference between your current rate and the rate you receive on the new loan. How long you stay in your home is also an important factor.
Let’s look at some recent trends that might affect your ability to refinance in 2024.
Home Prices Dipped in 2023
According to Zillow, the median home price in Seattle dipped to $824,264 by December 2023. That was a 1.8% decrease over the same month a year earlier. But economists also expect prices to continue rising throughout 2024.
Related: Seattle home prices
Steady home-price appreciation enabled a lot of Seattle homeowners to refinance their homes, though refinance activity over the past year has been slow due to high rates. Generally speaking, higher equity makes it easier for homeowners to qualify for mortgage refinancing, while low mortgage rates make it more beneficial.
Mortgage Rates May Decline in 2024
Mortgage rates have been very high lately, though their increase has slowed and they’re starting to come down. This has a more direct impact on refinancing. According to Freddie Mac’s weekly survey of the mortgage industry, the average rate for a 30-year fixed home loan is now 6.61%.
If rates continue to decrease throughout 2024, it will improve the potential savings for some Seattle homeowners who plan to refinance. Of course, nobody can predict the future of interest rates with complete accuracy.
As rates continue to decline, the savings from refinancing will be increased.
So the best thing to do, as a homeowner, is to look at where you are right now and decide if a Seattle refinance will work for you. We’ll talk about how to do that in the next section.
Should You Refinance Your Seattle Home in 2024?
Getting back to the question at hand. Should you refinance your Seattle home in 2024? Will your long-term savings justify the costs typically associated with refinancing?
The answer to these questions lies within the break-even point. This is the point at which your savings (from a reduced interest rate) begin to exceed your upfront costs. Of course, this assumes that your primary reason for refinancing is to save money over the long term.
To find out if a refinance will work to your advantage, you need to know (A) how much you’ll pay in closing costs, and (B) how much you’ll save each month after refinancing.
If you divide the cost of refinancing by the monthly savings, you’ll end up with the number of months it will take to reach the break-even point.
Example: If a borrower pays $3,000 in closing costs to refinance into a loan that saves $100 per month, it will take 30 months to reach the break-even point. (Because 3,000 ÷ 100 = 30.) After 30 months, the borrower’s accumulated savings will begin to exceed the amount paid in closing costs and fees. The longer the homeowner keeps the loan past the break-even point, the greater the savings.
This is why the recent rise in mortgage rates is so important. It will affect anyone who is planning to refinance a home in Seattle in 2024. As interest rates decrease, the potential for savings increases, and vice versa.
Looking to Refinance in Seattle?
If you would like to know if it makes sense to refinance your Seattle home, please contact our knowledgeable staff. We can help you run the numbers to find out if refinancing would work to your advantage. Sammamish Mortgage has been around since 1992, and we’d love to help you with our expertise. Based in the Pacific Northwest, Sammamish offers high-quality mortgage loan programs in Colorado, Oregon, Idaho, and Washington, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. We can help explain the process to you. If you’d rather View Rates on our website, you can. Or, if you are ready to get the process going, you can Apply Instantly or simply get a Rate Quote.