Refinance rates fall again: Mortgage refinance rates on May 7, 2024

David Paul Morris/Bloomberg via Getty Images

Today’s average refinance rates

Today’s average mortgage rates in May. July 7, 2024, compared to a week ago. We use interest rate data collected by Bankrate and reported by lenders in the United States.

Mortgage refinance rates change daily. Experts recommend shopping around to make sure you’re getting the lowest price. By entering your information below, you can receive a customized offer from one of CNET’s partner lenders.

About these tariffs: Like CNET, Bankrate is owned by Red Ventures. This tool provides partner rates from lenders that you can use when comparing multiple mortgage rates.

The vast majority of U.S. homeowners already have mortgages with interest rates below 6%. With mortgage refinance rates averaging above 6.5% in recent months, households are choosing to stick with their existing mortgages rather than swapping them for a new home loan.

This means that if interest rates fell to 6%, at least a third of borrowers who took out a mortgage in 2023 could reduce their interest rate by a full percentage point by refinancing Black Knight.

Refinancing in today’s market might make sense if the interest rate is above 8%, he said Logan Mohtashami, senior analyst at HousingWire. “However, with all refinancing options, it is a personal financial decision due to the costs associated with the loan process,” he said.

Where will refinance rates end up in 2024?

Mortgage rates have been soaring over the past two years, largely due to the Federal Reserve’s aggressive attempt to curb inflation by raising interest rates. Experts say a slowdown in inflation and the Fed’s forecast rate cuts should help stabilize mortgage rates through the end of 2024. However, the timing of Fed cuts will depend on incoming economic data and market reaction.

Homeowners looking to refinance should keep in mind that economics cannot be determined by time: interest rates fluctuate hourly, daily and weekly and are influenced by a number of factors. “It’s best to keep an eye on daily rate changes and have a plan to capitalize on a large enough percentage drop,” he said Matt Graham from Mortgage News Daily.

What you should know about refinancing

When you refinance your mortgage, you take out another home loan that pays off your original mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you tap into your equity with a new loan that’s larger than your existing mortgage balance, allowing you to pocket the difference in cash.

Refinancing can be a great financial move if you can get a low interest rate or pay off your home loan in less time. However, consider whether this is the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to significantly lower your monthly payment.

How to find the best refinance rates

Plans advertised online often require certain eligibility conditions. Your personal interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application. A high credit score, low credit utilization, and a history of regular and on-time payments will generally help you get the best interest rates.

30-year fixed rate refinance

For 30-year fixed refinances, the average interest rate is currently 7.30%, down 4 basis points from a week ago. (One basis point is 0.01%.) A 30-year fixed refinance typically has lower monthly payments than a 15-year or 10-year refinance, but it takes longer to pay off and typically costs you more in interest in the long run.

15-year fixed rate refinance

The average interest rate for a 15-year fixed refinance loan is currently 6.83%, down 3 basis points from the previous week. Although a 15-year fixed refinance will most likely increase your monthly payment compared to a 30-year loan, you’ll save more money over time because you’ll pay off your loan faster. Plus, 15-year refinance rates are typically lower than 30-year refinance rates, meaning you can save more in the long run.

10-year fixed rate refinance

The average interest rate on a 10-year fixed refinance loan is currently 6.87%, up 7 basis points from last week. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your home much faster and save on interest. However, make sure you can afford the higher monthly payment.

To get the best refinance rates, make your application as compelling as possible by getting your finances in order, using credit responsibly, and regularly monitoring your credit score. And don’t forget to talk to multiple lenders and shop around.

Reasons for refinancing

Homeowners typically refinance to save money, but that exists different reasons in order to do this. Here are the most common reasons homeowners refinance:

  • To get a lower interest rate: If you can secure an interest rate that is at least 1% lower than your current mortgage, refinancing could make sense.
  • How to change mortgage type: If you have a variable rate mortgage and want more security, you can refinance to a fixed rate mortgage.
  • To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
  • To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. By refinancing your debt to a shorter term, you will save interest in the long term.
  • Here’s how to unlock your equity through a cash-out refinancing: If you replace your mortgage with a larger loan, you can get the difference in cash to cover a large expense.
  • How to take someone’s mortgage away: In the event of a divorce, you can only apply for a new home loan in your name and use the funds to pay off your existing mortgage.

Source link