The Federal Reserve has slashed interest rates to near zero in recent months in an attempt to jump start the ailing economy during these unprecedented times. And while the federal funds rate is what banks change one another for borrowing, it also affects average people because lending institutions use that number to determine loan interest rates for consumers. And when it comes to the biggest loan the average American takes out, the interest rates have never been lower.
For the first time in history the average 30-year fixed-rate mortgage has fallen below 3%, with 15-year fixed-rates falling to an average of 2.48%. Homeowners have taken notice because refinancing applications made up a whopping 64% of all mortgage applications in recent months with no signs of slowing down anytime soon. That's because there simply aren't many houses for sale, so owners are choosing to refinance their current home instead.
My wife and I are one of the many homeowners who have jumped on the refinancing bandwagon. We did a cash out refinance to help pay for some major remodeling we are going to do at our current home. After initially considering moving to a new home, we decided instead to stay at our current home and splurge on some upgrades. We were able to lock in a 30-year at 2.78%. We could have gotten an even better rate if we went with a 15 or 20-year term, but in the end we went with the 30-year to make sure we weren't stretching ourselves thin.
If you own your home, have you or are you planning on refinancing while rates are this low? If not, I'm interested in hearing some reasons why you're choosing not to at this time.
WyattTown Wrote: Are there fees associated with refinancing? If so what would a person refinancing expect to pay for the process? Also I assume you have to do another credit pull to do this. Maybe those are 2 reasons some people chose not to. Though with the amount you can save, imagine that won't deter too many.
It really just depends. My wife and I got a great deal where the closing costs in our refinance were waived if we opened up a checking and savings account with the bank we refinanced with. The only additional costs we had was our property assessment, which was quite modest, along with some other rather minimal fees.
However, every bank and lending institution is different. We worked with a mortgage broker who helped guide us towards the best deal based off our finances, credit rankings, and another of other factors. I've never worked with a broker before and I'll never not work with one again. Ours helped us find one heck of a deal.