To battle rising inflation, higher loan interest rates have become the norm. For homeowners to secure a mortgage with a high interest rate, potential rate drops may signal the ideal time to refinance the loan. Discover how current refinance rates affect 30-year fixed mortgages and how much you’d have to pay each month.
Take a closer look at the current loan market and whether it’s worth refinancing your loan. The A and N Mortgage experts explain your options in this helpful guide.
Current Refinance Rates
30-year fixed rate mortgages have a current refinance rate of just under 7%, a noticeable drop from previous months. The interest rate for refinancing at a 10 or 15-year loan term stands even lower at 6.40% and 6.49%, respectively. While these rates might be higher than you’d prefer, any downward projection is a welcome change for people looking to buy a home or refinance their home loan.
Experts predict further rate cuts going forward, making this the ideal time to research current refinance rates, 30-year fixed mortgage costs, and potential savings.
Expectations From Recent Refinance Rates
Given the current rates, a homeowner with a 4% interest rate on their mortgage won’t benefit from a 30-year fixed mortgage refinance plan. However, if you’re paying a higher home loan interest rate than the current refinance rate, it’s worth consulting a lending professional about refinancing. Even a 1% decrease can help you save money each month that you can put toward other loans and expenses.
Additional Read: How to Lower Your Mortgage Interest Rate
You should focus on something other than the percentage change but rather on what that change can mean for you. For example, if you’re in a small starter home right now but want to expand your family and need more space in the future, refinancing may not be worthwhile. However, if you love your house and don’t plan to sell it any time soon, you can save long-term by refinancing.
Is Now The Right Time To Refinance?
There’s no one-size-fits-all solution to refinancing your home loan. To determine if now’s the right time to act, consider the following factors:
- Current 30-yr fixed mortgage rate vs. your original interest rate
- Your refinance loan amount
- Total savings that you’d face
- Loan closing costs
Speak with an expert about refinancing; they’ll review everything that should influence your decision.
Tools And Calculators To Determine Potential Savings
Remember that any percentage changes in national interest rates don’t mean you’ll see your monthly mortgage payment change based on that percentage. Find out how to calculate current refinance rates for 30-year fixed mortgages and 15- and 10-year loan terms below.
30-Year Fixed-Rate Refinance
Say you currently have a 30-year home loan with a fixed interest rate of 7.5%. Refinancing to another 30-year term with an interest rate of 6.5% or lower will bring you monthly savings. This is a minor change worth refinancing for, but the savings will add up in the long term and help you pay off other existing debts.
15-Year Fixed-Rate Refinance
Switching from a 30-year mortgage to a 15-year one not only gives you a lower interest rate but means you’ll save even more over time since you’ll have half of the years of your original loan’s terms. If you’re only a few years into your current term and decide to refinance to a 15-year mortgage, your monthly payments will increase. However, if you’ve paid off your home for ten years and decide to consolidate the remaining 20-year mortgage into a 15-year term, it puts you in good shape to pay off your home faster.
Additional Read: 15 vs. 30-Year Mortgage Calculator
10-Year Fixed-Rate Refinance
You’ll experience higher monthly payments with a ten-year refinancing plan but pay the least amount in interest. Figure out how much you can afford per month to pay off your loan’s principal amount and have peace of mind that lenders won’t be receiving large amounts in interest.
Pros And Cons Of A 30-Year Fixed-Rate Refinance
Given current refinance rates, 30-year fixed mortgages can appeal to homeowners looking to lower their payments. Some of the biggest advantages to refinancing with a 30-year loan term include:
- Improved loan value: You’ll have lower interest payments, increasing monthly cash flow. You can use these savings to lower your debt-to-income ratio or invest in future earnings.
- Insurance savings: If you refinance when your property value goes up, you might be able to eliminate the cost of private mortgage insurance.
- Cash-out options: Boost your home’s value by securing a cash-out refinancing plan. This will slightly raise your monthly payments but provide you with the capital you need to undergo home renovations.
While these benefits have their appeal, you should consider the potential drawbacks of refinancing your home loan. Many homeowners need to consider the refinancing fees and closing costs they’ll face. In some cases, these can amount to up to 5% of the refinance loan amount.
If you’ve already spent ten years paying down your mortgage and refinance with another 30-year loan, paying off your home will take even longer.
Tips For A Successful Refinance
If you want to take advantage of current refinance rates, 30-year fixed mortgages can improve your financial outlook. To secure the best loan possible, make sure you follow the tips below:
- Get rates from multiple lenders
- Minimize your debt-to-income ratio
- Build your credit score and keep it up
- Refinance your primary residence rather than a vacation home
The interest rate your loan receives depends on existing debts you have to pay off and your credit history. Lenders have less confidence in you as a borrower if you have thousands of dollars in credit card debt that drag down your credit score and debt-to-income ratio. You’ll likely receive a higher refinancing rate than someone with the same loan amount but better credit and minimal debts.
Shopping around and speaking to at least three different lenders is critical. This will allow you to compare rates and select the best one.
Discover Expert Opinions And Homeowner Experiences
Every homeowner will have a different experience refinancing based on their financial goals. Your loved ones that refinance their homes could save exponentially but you might receive various benefits depending on the current refinance rates, 30-year fixed mortgage terms compared to 15-year terms, and more. The lending experts at A and N Mortgage are here to guide you through the process and explore all of your options.
Contact us today to discuss refinancing and whether it’s your right decision. Call (773) 305-LOAN to speak with a specialist.
