The coronavirus pandemic has wreaked havoc on many American’s personal finances over the past year. According to Pew Research, about half of all adults feel like the COVID-19 crisis set them back financially – and of those struggling, 44% feel like it could take them three years or more to recover.
One of the biggest financial impacts of the coronavirus pandemic has been the effect on the real estate market and rates. Mortgage rates and mortgage refinance rates hit an all-time low, making refinancing a good option for anyone looking to improve their financial situation.
Of course, mortgage rates have seen a slight uptick over the past month, leaving many people wondering if now is still the best time to refinance. The answer is yes -- it’s still a good opportunity for everyone to take advantage of low mortgage refinance rates. However, these lower rates won’t last forever so the time to act is now.
Anyone who’s curious about how much they could save can visit Credible to compare rates and mortgage lenders and view their home loan options. Let’s look at a few reasons why refinancing your mortgage is still a viable option.
1. Current interest rates aren’t historically low, but they’re close
While not historically low, mortgage rates and mortgage refinance rates are at near historic lows. According to data from Freddie Mac, rates for a 30-year mortgage are currently at 3.13%.
While that’s not the record low rate you would’ve earned in January when mortgage interest rates dropped to 2.65%, it’s far better than anything we’ve seen over the past five years. For instance, in November 2018, a 30-year mortgage rate was 4.94%.
Interested in comparing rates for multiple mortgage lenders? Credible's free tool can help you find the right mortgage refinance option for you in minutes.
2. The potential savings could be significant
If you think your current mortgage rate is pretty good, then you may be wondering if it’s even worth the time and effort to refinance your mortgage. For instance, let’s say you already have a 4.05% mortgage interest rate. Is receiving a rate that’s 1% lower really worth the effort?
Yes, it is. If you refinanced a $300,000 30-year mortgage, you would save roughly $540 a month on your mortgage payments. And this will add up to thousands of dollars in savings over the life of the loan.
If you’re interested in learning how much you could save by refinancing, check out Credible's free online mortgage refinance calculator.
3. Homeowners could see long-term savings
One of the things to keep in mind is the cost of refinancing your mortgage. You could have to pay origination fees, which typically cost about 1% of the total loan amount. You’ll also have to pay closing costs, which are typically between 2% and 5% of the mortgage.
It will take time to break even and recoup the costs you spent on refinancing your home. For most borrowers, this takes about two and a half years. Homeowners who plan to stay in their current home for a long time will see the most significant savings from a mortgage refinance.
If you plan to move in the next year or two, then now may not be the right time to refinance your mortgage because you could lose out on some potential benefits.
If you believe the signs are pointing toward mortgage refinancing and you’re ready to learn more, you can get in touch with one of Credible’s experienced loan officers. They can learn more about your situation, answer all of your mortgage refinancing questions, and help you move forward on the right track.
4. These low mortgage interest rates won’t last forever
And finally, mortgage rates will not stay this low forever. Most industry experts are expecting interest rates to increase in 2021 as the economy begins to rebound and stabilize. That means if you’ve been on the fence about refinancing your mortgage, the time to act is now.
The best thing interested homeowners can do is start shopping around and comparing your refinance options with different mortgage lenders. That’s why using a resource like Credible is so valuable -- you can quickly view offers from multiple mortgage refinance servicers in one place. And since they do a soft inquiry on your credit, you can get the information you need without worrying your credit score will drop.
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