Are you considering refinancing your home? The decision to refinance varies for everyone and depends on your unique financial situation. According to a Valley expert, it’s crucial to assess your finances before making a decision.
Mortgage rates have seen a significant drop in August, and studies suggest that these rates may continue to decrease for the remainder of the year. Currently, the 30-year fixed-rate mortgage stands at just under 6.5%, as reported by Freddie Mac. The Mortgage Bankers Association also noted a surge of nearly 120% in home refinance applications compared to last year.
One of the reasons for the decrease in rates is the expectation that the Federal Reserve will lower the federal funds rate in September. Federal Reserve Chair, Jerome Powell, hinted at this during a recent statement, indicating their readiness to cut the key interest rate. However, the exact timing and extent of these rate cuts remain uncertain.
Local mortgage expert, Eric Martin, highlighted that the Arizona housing market is currently in a mixed state. While home prices have stabilized in some regions, inventory remains low. Martin emphasized that more clarity on potential rate cuts is expected after the Fed meeting in September.
As rates drop, Martin anticipates a significant increase in homebuyers entering the Arizona market. When considering refinancing, Martin advises that each individual’s financial situation is unique. The optimal time to refinance is when interest rates are substantially lower than your current rate.
Many individuals have accumulated debt post-Covid, and refinancing can offer substantial savings through debt consolidation. Martin has witnessed clients saving thousands each month through this process.
While there are numerous benefits to refinancing, Martin suggests holding off if you plan on moving within the next year due to associated closing costs. It’s essential to evaluate whether refinancing aligns with your financial goals.
One common misconception Martin encounters is that individuals believe they need to reduce their interest rate by at least 2% to refinance. However, even a half a percent reduction can be advantageous, especially for debt consolidation or removing private mortgage insurance.
Preparation for potential rate cuts involves consulting a local loan officer to evaluate your financial situation and home equity. Transparency is key when selecting a loan officer, ensuring they provide honest information on refinancing fees and have positive online reviews.
It’s crucial to choose a loan officer who educates you on the refinancing process, leaving you more informed than when you began. Stay informed about the latest local news by downloading the 12News app for breaking news updates on your phone.
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