Refinancing your mortgage involves trading in your old home loan for a new one, typically with different interest rates and terms. This can help lower your monthly payments, pay off your loan faster, or access cash from your home’s equity. However, with rising mortgage rates in recent years, fewer homeowners can benefit financially from refinancing. Despite this, refinancing can still be beneficial for adjusting loan terms or types depending on your situation and financial goals. Melissa Cohn provides current mortgage and refinance rates as of August 16, 2024. Refinance interest rates have held steady at around 7% in the first half of 2024, but have dropped significantly this summer, with the average rate on a 30-year fixed refinance close to 6.5%. This decline gives homeowners who purchased when rates were higher an opportunity to save on monthly mortgage payments. However, the majority of homeowners with rates below 5% may have limited opportunities for refinancing. Experts predict that with Fed rate cuts on the horizon, mortgage rates will continue to trend downward over the next few months. Refinancing can help save money on monthly payments or pay off the loan faster, especially when interest rates are lower than when the original mortgage was secured. There are various reasons to consider refinancing, including reducing monthly payments, paying off the mortgage sooner, accessing cash from home equity, switching to a fixed-rate loan, or eliminating private mortgage insurance. However, it may not be beneficial to refinance if fees are too high, interest rates are higher than before, you plan on moving soon, or you are close to paying off your mortgage. Different types of refinancing options include rate-and-term refinance, cash-out refinance, and FHA or VA streamline refinance. To get the best refinance rate, review your credit report, dispute any inaccuracies, and improve your credit score before applying for a refinance.
