2020 has been a difficult year for many American’s finances. However, mortgage rates keep falling to record lows. When should you refinance your home?
Mortgage rates are falling at a record pace due to COVID-19
The COVID-19 pandemic has caused mortgage loan rates to fall pretty dramatically. Throughout the course of 2020, mortgage rates have hit a record low four times this year. On average, a 30-year fixed-rate mortgage loan has dropped to around 3.13% APR. The combination of more Americans working from home and low-interest rates have caused an increase in houses selling fast.
Should I always refinance my mortgage if interest rates are lower?
For many, it seems like refinancing your mortgage as rates fall is an obvious choice. But, there are some considerations to keep in mind that may make a new loan not worth it. If you are in the house that you see yourself staying in for the long term and not planning on moving in the next five to ten years, then it’s probably worth it to refinance. If you’re planning on selling soon, refinancing probably isn’t the best option, as fees will accrue and will be more than you would potentially save.
It’s harder to qualify for refinancing loans
Lenders are being especially picky at the moment and have raised their qualifications for lenders when they are applying for a new loan-including higher credit scores and less debt. This means it may not be as easy to refinance as it looks. It might be worth a call or visit to your current lender. They want you to stay with them, so it’s possible that they may offer a special deal on refinancing.
Taking advantage of refinancing rates because of the economy’s turmoil may work for you in the long run. But there are considerations to keep in mind before you jump into a new 15 or 30 year loan. If you’re unsure about what to do in your situation, speak with a financial advisor who can help you make the right decision.
Originally published at https://www.seniorfinanceadvisor.com.