As mortgage interest rates continue to drop to record lows, many homeowners are wondering: Should they refinance their mortgage right now?
Timing a refi is always tricky, but the time may indeed seem ripe for one, since according to Freddie Mac’s most recent Primary Mortgage Market Survey released Aug. 22, the average 30-year fixed interest rates have fallen to 3.55%—the lowest rate in nearly three years.
“Now can be a great time to refinance for many Americans who currently have a mortgage rate above 3.5%,” Sam Khater, chief economist at Freddie Mac, told realtor.com.
“In fact, households that refinanced in the second quarter of 2019 will save an average of $1,700 a year, which is equivalent to about $140 each month,” he adds. “With mortgage rates moving even lower in recent weeks, it’s possible for homeowners to reduce their monthly mortgage payment even more.”
The number of home refinance applications is up 167% from a year ago, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Aug. 23. Refinances accounted for 62.4% of mortgage activity this past week.
But whether refinancing is the best option for you depends on several factors. Here are some questions to consider before you refinance your mortgage.
Will mortgage interest rates remain low, or rise?
Interest rates may be low now, but there’s uncertainty over how long it will continue, says Tendayi Kapfidze, chief economist at LendingTree.
“The future path is uncertain,” Kapfidze says, “as much of the change is driven by political considerations around the trade war that no one can predict with any confidence.”
With the flux, it may be important to act swiftly. Waiting for an even lower rate could be risky, and homeowners may miss a golden opportunity to refinance, he explains.
“If it lowers your monthly payment and your lifetime interest—or can give you the opportunity to access equity for other life events—it’s a good thing to consider,” Kapfidze says.
Comparing different rates from different lenders will help you get the best deal. For example, a LendingTree analysis revealed that comparing mortgage rates results in average savings of more than $53,500 over the life of a loan.