How to know if mortgage refinancing makes sense now

In the post-pandemic era, inflation surged to a multi-decade high and the Federal Reserve responded by raising the benchmark interest rate. Although mortgage rates don’t directly track that benchmark rate, borrowing costs still soared for home buyers.

With low mortgage rates off the table, refinancing became a non-starter for anyone who’d obtained a loan at the 3.00% to 5.00% rates customary between 2009 and 2022. Those who bought homes also got stuck with expensive loans, even after shopping for the best rates.

The good news is, the tides are turning. The Federal Reserve reduced rates at its September meeting, with further reductions expected in the months ahead. Mortgage rates are already down over a point and home loans with rates under 7.00% are now available again for many borrowers.

Aspiring homeowners are beginning to come off the sidelines to buy properties before declining mortgage rates push up real estate prices and existing homeowners who bought properties when rates were higher are now grappling with the question of whether to refinance now or wait.

 

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