Should You Consider Refinancing Your Mortgage?
by Brandon Miller on Oct 6, 2020
On July 16, mortgage giant Freddie Mac announced that the average interest rate for a 30-year home loan had fallen to 2.98%. In addition, the average interest rate for a 15-year home loan had declined to 2.48%.1
A 30-year mortgage at less than 3% interest? A 15-year mortgage at less than 2.5% interest? These lows were historic milestones, unseen in the 49 years of Freddie’s weekly surveys. It’s unclear how long this low-rate environment may persist.1
Are you considering refinancing your mortgage? Keep in mind that just two summers ago, the average interest rate on a 15-year, fixed-rate mortgage hovered around 4%, while the 30-year was in the vicinity of 4.5%.2
Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice. We would encourage you to consult with your tax, legal, or accounting professionals before considering any changes to your mortgage.
A traditional refinancing – in which you swap your current mortgage for a new one – may help you manage your monthly payment. Among other factors, you will need to consider the loan amount and length of the loan during the refinancing process.1,3
Refinancing your mortgage may be a challenge. Loan demand is high right now, and some lenders have raised their standards amid the current economic uncertainty. Some factors that a lender may consider include your credit score, work history, and debt-to-income ratio.4
Could mortgages become even more affordable in the months ahead? While this may seem improbable, it cannot be ruled out. Mortgage issuers are dealing with a level of uncertainty that makes it harder for them to judge risk and assess the long-term value of the loans they originate.
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1 - Orange County Register, July 16, 2020.
2 - FreddieMac, July 18, 2020.
3 - NerdWallet, September 4, 2019.
4.- NYTimes, June 5, 2020