NEWTON, Mass. — Interest rates are finally starting to drop, creating an opportunity to refinance for many people.
David Jordan recently bought a house, is already looking to refinance, and hasn’t moved in yet.
“If things drop another few percentage points in the next year or two, we can always readjust.”
“If you have bought a home in the last few years, you should consider refinancing now. Mortgage rates have fallen significantly…almost 2 percentage points since hitting 8% last October. Greg McBride of www.bankrate.com said.
Marie Presti, a Massachusetts real estate broker, suggests that her clients apply for the lowest refi rate that covers closing costs.
“Even if interest rates drop in two months, you can still refinance again if you consider options with no closing costs.”
When buying a home, buyers are often tempted. Brian Mahoney, Senior Vice President and Director of Sales at Salem Five Mortgage Company, advises:
“I think the most important thing is that you can afford the payments you have to make indefinitely on your initial purchase.”
If refinancing is an option, consider how long you plan to live in the home, Mahoney says.
“We like the idea of recouping the money we spent on closing costs within 26 months,” Mahoney said. “In the short term, you want to at least break even on the money you might spend.”
Many homeowners still fondly remember the boom days of the recent real estate market, when mortgages were less than 3%. McBride doesn’t expect those numbers to return.
“This is the beginning of a series of rate cuts that we will see not only through the rest of this year, but through much of 2025,” McBride said. “But just to give you a little bit of context, we’re not going back to a low interest rate environment. We’re moving from high interest rates to not-so-high interest rates.”
He believes if homeowners can reduce their loan by 0.5% to 0.75%, it’s time to start considering refinancing.
(See below: Consumer credit card interest rates are at an all-time high, analysts say)
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