Many Americans who currently hold a mortgage wonder if now is the right time to refinance, or when the right time might be.
2022 has been difficult in terms of inflation and rising costs. Many people struggle to afford gas, food, and even utilities. The August rate was 8.5%.
In response, the Federal Reserve decided to drastically raise interest rates to offset rising inflation.
On September 21, interest rates were inflated by 0.75%, bringing them to 3.75%. Further increases are expected in the future to help slow the rate of inflation, according to Marca.
With interest rates rising, when is the right time to refinance a mortgage?
As rates change, people wonder if and when a good time to refinance their mortgage might be.
All in all, it wouldn’t be a good idea for someone to refinance their mortgage right now. Refinancing would be a better idea once interest rates start to fall again. While that’s a bad idea for most, that doesn’t mean it applies to everyone.
The only reason to refinance a mortgage is to save money and lower your interest rate by at least 1%.
Refinancing could end up costing more due to fees. Fees you may end up paying to refinance your mortgage include credit report fees, loan origination fees, and appraisal fees.
If you choose to refinance your loan now, make sure it’s because it saves you money on your interest payments or helps you pay off your loan sooner.
Your credit score will also play a role. If it goes up, it might be a good idea to refinance and get a better interest rate.
Choosing to refinance your mortgage is a personal decision and in some cases simply waiting out the economy might be the best choice.