Will you finally be able to refinance your mortgage this fall? Here’s what some experts predict
The housing market has been tough on buyers over the past few years. Soaring home prices, bidding wars and mortgage rates that climbed from historic lows near 3% to above 7% priced out millions of potential homeowners. Many who did manage to buy during the rate surge now carry mortgages with payments that strain their budgets.
Conditions are shifting in favor of borrowers, however. Mortgage rates have declined recently, dropping to around 6.5% for 30-year fixed loans – the lowest levels since last October. Plus,the federal Reserve’s anticipated rate cuts this fall could push rates even lower. This, in turn, could create the first real mortgage loan refinancing possibility we’ve seen recently.
We spoke to mortgage experts to better understand whether this opportunity will pan out and learn who stands to benefit most from refinancing before year-end. Here’s what they had to say.Find out what mortgage loan rates you could qualify for today.
“This fall could be [a good refinancing time] for homeowners saddled with rates above 7% … especially if you’ve been paying 7.5% or higher from the peak,” says Steven Glick, director of mortgage sales at HomeAbroad, a real estate investment fintech company.
With rates already down to around 6.5% and forecasts suggesting further drops, the opportunity window appears to be opening.
Debbie Calixto, sales manager at mortgage lender loanDepot, agrees.
“The market is anticipating a 25-basis-point reduction in the federal funds rate by [fall or early winter],” Calixto says. “While this may not cause mortgage rates to drop instantly, it typically sets the stage for a gradual decrease to follow.”
Market timing isn’t everything, though.
“Whether the fall brings a good opportunity depends more on [your] loan and financial situation,” Jim Breeze, senior vice president of mortgage product development at PNC Bank, says.
Who will benefit most from mortgage refinancing before year-end?
According to the experts we interviewed, you’ll likely benefit most from refinancing this fall in these scenarios:
You have a rate above 7%. “Locking in now at mid-6% could save thousands annually while rates are dipping,” Glick says. You have a large loan balance. Homeowners with mortgages of $500,000 or more can benefit from even modest rate reductions as small as 0.375%, according to Tanya Bates, senior vice president and regional manager at Guaranteed rate.
you plan to stay in your home long-term. Refinancing comes with closing costs, so you’ll need to stay in the home long enough to recoup those expenses.
Your financial situation has improved. A higher credit score or lower debt-to-income ratio could qualify you for a better rate.