Since 2018, mortgage rates have dropped from 5% to 3%: why refinance now

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Mortgage interest rates fell below 3% for a 30-year loan, which is good news for consumers. Both current mortgage borrowers and potential homeowners can benefit from today’s mortgage rate environment. (iStock)

Considering buying a home or refinancing your current mortgage? Don’t miss the chance to lock in a historically low mortgage interest rate.

Mortgage rates are consistently below 3% for a standard 30-year mortgage, according to the company. latest poll from Freddie Mac… Rates are even lower on 15-year mortgages, hovering around 2.2% for this popular refinancing option.

Even compared to just three years ago, mortgage rates are extremely low. In 2018, 30-year rates reached almost 5% and never dropped below 3% until last year.

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Nose talk about future rate hikes from the Federal Reserve, experts estimate that mortgage rates will soon rise again. The Mortgage Bankers Association (MBA) predicts that Mortgage rates in 2023 will average 4.9%… Bottom line: If you’ve been waiting for a sign to refinance your mortgage or get a home loan, that’s it.

The mortgage rates quoted by Freddie Mac are weekly averages, but you can qualify for even lower rates depending on your financial situation. The rate table below shows the indicative interest rates offered by real mortgage lenders and you can check mortgage refinancing rates without affecting your credit score on Credible.

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Why should you refinance your mortgage?

It’s no secret that now is the best time to refinance your mortgage. By earning a historically low interest rate, you can save money immediately as well as in the long run. There are several ways that refinancing can affect the terms of your loan:

  • Pay off your mortgage faster by switching to Mortgage for 15 years Your monthly mortgage payment may increase slightly, but you can save tens of thousands of dollars over the life of your loan – and get rid of your mortgage debt twice as fast.
  • Reduce monthly payments by refinancing for a longer period. If you’ve just bought your home in the past few years, it might be worth refinancing a 30-year mortgage to significantly lower your mortgage payments.
  • Take advantage of your home’s growing capital with cash advance refinancing. With home prices at an all-time high, you can take out a mortgage in excess of your current loan balance and set aside the difference to spend at your own discretion.

The main disadvantage of refinancing a mortgage is the closing costs, but these are nominal and are usually reimbursed within the first few years of refinancing. As long as you plan to stay in your home long enough to offset the commission – and you can secure a lower mortgage rate than the one you’re currently paying – then refinancing won’t be difficult.

When you refinance your mortgage, be sure to compare offers to ensure you are getting the lowest mortgage rate for your financial situation. You can compare rates for several lenders in just a few minutes on the Credible online loan marketplace.

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By the Numbers: Find out how refinancing can reduce interest costs by nearly $ 100K.

You’ve probably heard that refinancing your mortgage can save you a significant amount of money, but it’s hard to imagine the potential savings when calculating such large amounts. The following example shows how refinancing your mortgage can save the homeowner has nearly $ 100,000 in interest over the term of the loan.

Let’s say you bought a home for $ 400,000 in October 2018 when the average mortgage rate was 4.90%. With a 20% down payment of $ 80,000 and a total loan of $ 320,000, this is what your mortgage will look like by July 2021:

  • Monthly payment: USD 1,698
  • Loan balance: USD 306,194
  • Interest payment until July 2021: USD 42,239

By the time the mortgage is paid off in October 2048, the total loan cost will be $ 611,397 after an interest payment of $ 291,397.

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But using current refinancing rates can save you tens of thousands of dollars in interest and help lower your monthly payment. Mortgage rates fell to 2.90% in July 2021, a full two percentage points lower than they were just a few years ago.

Assuming mortgage refinancing will cost you 1.5% of the total loan amount, closing costs will be about $ 4500. Here’s what happens if you fund the remaining balance plus the closing expenses ($ 310,787) on a 30-year mortgage with a 2.9% mortgage rate:

  • Monthly payment: USD 1,294
  • Total interest paid: USD 197,144
  • Savings of interest over time: USD 94,253

In addition to saving nearly $ 100,000 in interest over the life of your home loan, you will also cut your monthly mortgage payment by more than $ 400. Use Credible’s mortgage payment calculator to find out how much you can save by refinancing your remaining mortgage balance to a lower interest rate.

If you still need guidance, contact a loan officer at Credible, which walks you through the process of obtaining a mortgage and helps you decide if refinancing is right for you.

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Have a financial question but don’t know who to contact? Write to a safe money expert at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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