Refinancing to a record-low mortgage rate? Here's what to know
Ready to refinance? Take a minute to determine if a mortgage refinance is the right choice for you right now. (iStock)
Mortgage interest rates have plummeted over the last year. As of publication, the average 30-year fixed-rate mortgage sits at 3.09%, and the average 15-year fixed-rate mortgage hovers around 2.4%. At this time last year, before coronavirus took hold, the average interest rates were at 3.65% and 3.06%, respectively. With fixed rates so low, the decision to refinance your mortgage could save you money.
Interest rates dropped significantly in response to an emergency rate reduction by the Federal Reserve in March. The Fed's continued efforts to help sustain the market amidst a global pandemic means the rates could remain low through 2023.
With record-low mortgage refinance rates, now may be an excellent time to refinance your home. Credible can help you compare mortgage lenders and discover the best refinance rates available today so you can lower your monthly payments and meet your financial goals. As you proceed with a mortgage refinance loan, however, there are a few things to think about.
1. Make sure a mortgage refinance is the right step
For many homeowners, taking advantage of record-low mortgage refinance rates will help them save thousands of dollars. However, it may not be the right choice for you. Some reasons you may reconsider refinancing your home include:
- If you plan on moving within a few years and won't recoup the cost of your refinance/closing costs.
- If you won't save money long-term or if refinancing will make it much more challenging to make your monthly payments.
- If you can't afford the closing costs.
While refinancing a mortgage can save money, it may not be the right option for everyone. Take time to consider your future needs before spending time and money on a refinance. Consider using a refinance calculator to determine how lower rates could save you money (thousands of dollars, more specifically).
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2. Talk to an experienced loan officer
Refinancing your home is a big decision. Try to talk to an experienced loan officer about any questions and concerns you have. Here are a few questions you should ask your lender as your deciding if refinancing your mortgage is the right choice for you:
- What type of loans do you offer?
- What credit score do I need to have to qualify for a refinance with your company?
- How much home equity do you require for a refinance?
- Do you offer rate locks?
- Can you tell me what my monthly payment would look like with this refinance?
- What type of closing costs should I expect with your company?
- Will you sell my loan?
If you’re thinking of refinancing, consider using Credible. You can use Credible's free online tool to easily compare multiple lenders and see prequalified rates in as little as three minutes. Visit Credible to get in touch with experienced loan officers and get your mortgage questions answered.
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3. Shop and compare lenders
The most important thing you can do during your refinance process is to compare multiple lenders. Talking to various lenders allows you to compare rates and customer service. While reviewing different lenders is the best way to save money, it also enables you to get a feel for the company you could be choosing. In addition to savings, look for a company that fits your needs as a customer.
You can review multiple loan options and fill out fewer forms by visiting Credible to compare rates.
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4. Look at homeowner's insurance
When you refinance, it's also a great time to review your current homeowner's policy and compare it to other options. You'll need to know what type of policy your new lender requires. Many lenders accept standard policies, but most of those don't cover damage from floods or earthquakes. If you live in an area susceptible to these natural disasters, you may need to purchase additional insurance or look for a new policy.
As you're reviewing your homeowner's insurance, check to ensure you still have enough coverage. Your policy should be able to cover the cost to rebuild and refurnish your house completely, at a minimum. If property values have changed, you may need a little more coverage.
When you're researching homeowner's insurance policies, make sure you're not paying for more than you need. Speaking to several lenders and reviewing your current policy can help you save a lot of money on your policy.
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Make research a priority
Refinancing your home is a big financial decision. While there are significant savings on the table, ensuring that a refinance is the right choice for you right now is essential. Ensure you understand whether a refinance fits your financial situation, find time to talk with an experienced lender, compare rates, and review your homeowner's insurance policy to maximize your savings. Mortgage rates are hovering around all-time lows. There may never be a better time to contact mortgage lenders to refinance your mortgage -- if your personal financial situation allows.
You can explore your mortgage refinance options in minutes by visiting Credible to compare rates and lenders. Check out Credible and get prequalified today.
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