As a result of the COVID-19 pandemic, the government lowered the federal funds rate in 2020, causing interest rates on mortgages to fall to historic lows. These low rates gave homeowners the chance to save hundreds on their monthly payments and thousands over the life of their loan. As mortgage rates start to creep upwards, however, you may wonder if now is still a good time to refinance.
Generally speaking, now is still a great time for people who are interested in refinancing their mortgages to get started. Although rates did hit record lows in 2020, rates in 2021 continue to stay relatively low. Although we may not see rates as low as they were in 2020 again for a while, the Federal Reserve did indicate that they have plans to keep mortgage rates steady until at least 2022 or even later. This means lenders will continue to offer low rates for the foreseeable future, and you can take advantage of the benefits that refinancing offers.
Even though mortgage rates continue to stay low, refinancing isn’t the right move for every homeowner. You may want to consider refinancing if your credit score has dramatically improved since you bought your home or if your debt-to-income ratio has also improved. If you pay private mortgage insurance, want to use the equity in your home to get a lower payment, or want to cut back on the length of your loan, refinancing should be a consideration.
For more tips like this and information about what mortgages and real estate look like in today’s market, make sure you check out our podcast, Today’s Real Talk.