Mortgage rates have been high for a couple of years now, which has kept many homebuyers hesitating to refinance their mortgages. A lower-rate scenario is ideal to help homeowners realize significant savings over the life of their mortgages with a refinance.
That said, mortgage rates are expected to dip over the next few months
Given these factors, is now the time to refinance?
How Will the Fed’s Interest Rate Hikes Impact Mortgage Rates?
After months of taking steps to keep rates down following the health crisis, the Fed increased interest rates several times over the past couple of years. This has caused mortgage rates to soar, making refinancing not as attractive to homeowners.
But rates have recently plateaued and are now on their way down. As of this writing, the 30-year fixed-loan rate is 6.61%. And it’s expected to reach near 6.0% by the end of 2024.
Should you refinance now or wait? Timing the market is difficult but if you can save money on interest with little to no closing costs there is little downside to refinancing. If rates continue to drop in the future you can always look to refinance again down the road.
Real Estate Transactions in the States
Washington State is considered one of the hottest markets in the entire country. Demand is skyrocketing, and the current supply cannot keep up.
This has helped contribute to soaring home prices over the past year. The current average home price in Washington State is $566,052.
Like Washington State, Colorado is also seeing a sizzling real estate market. Housing markets across Colorado – especially in places like Denver – are extremely hot right now. The housing inventory just cannot keep up with demand in this state. The market is certainly a very competitive one.
For instance, in Denver, homes are selling in as little as 10 days after being listed. Prices in the city now sit at $555,429. Buyers are continuing to want to get into the market in centers across Colorado.
The housing market across the state of Oregon is very healthy. This year is still a good time to get into the market, though it may be best to get in sooner rather than later in order to buy before home prices continue to soar.
As of late 2023, home prices in Oregon are $483,939.
Business observers see no decline in the enthusiasm for refinancing on the part of homeowners. Lenders are fully equipped to originate and approve loans online.
Right now, the average home price in Idaho is $434,224. Boise, in particular, has contributed to the state’s dramatic rise in home prices. Right now, the average home price in the city now sits at $460,502.
Should I Refinance My Home?
With the knowledge that mortgage refinance is relatively safe, both legally and biologically, prospective borrowers must examine their individual circumstances as to whether replacing the current mortgage is a wise decision. Certain financial and legal issues are worthy of consideration.
Employment and Income
Lenders obtain employment verifications to make sure borrowers are financially capable of carrying a mortgage. Borrowers should understand that getting approved for a mortgage requires them to meet stringent criteria, which have been more stringent over recent years.
Rate on Current Loan
As mentioned earlier, mortgage rates are on the rise, though they are still relatively low. Will any potential savings make up for the costs associated with applying for and closing another home loan? How long you stay in your house can help determine when you break even and begin to save.
3 good questions to ask if you presently have a low-rate mortgage:
- Will refinancing with a shorter term help me to pay off the loan faster?
- Does my equity allow me to take cash out when refinancing?
- Will refinancing require me to pay mortgage insurance?
The ideal answers should be yes, yes and no. If so, fire away. One more consideration: now is the time to switch to fixed-rate if your current mortgage is adjustable. Low rates are not a perpetual guarantee.
Credit Scores and Debt
Especially for the temporarily unemployed, good credit becomes all the more important for gaining the confidence of underwriters. If, since the last mortgage closed, a borrower has taken on a larger volume of consumer debt, it may show up in the FICO score and will definitely affect the debt-to-income ratio so important when evaluating applications.
Despite the attractiveness of the new rates, prospects should review their credit report with a loan officer.
Liens and Judgments
Along the same lines, if a borrower has incurred liens or judgments that are attached to the property since closing on the current mortgage, a lender will condition the refinance on paying those off or, alternatively, getting them discharged.
Depending on the size of these claims, it might make sense to delay refinancing until these matters are settled once and for all. The title company can not issue a clean policy to the lender as long as a lien or judgment stays in place. Furthermore, they may not appear on the credit report, showing up only on the title report.
In deciding whether or not to refinance, potential applicants do well to discuss their situation with a mortgage professional. This expert knows from experience when refinancing makes sense…and when it does not.
Ready to Refinance Your Mortgage?
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.
To get a rate quote, you can Contact Us. 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.