Mortgage Rates: When should you refinance your mortgage?

TeaThey have seen a rapid rise in inflation across the country in the year 2022 AmericaWith the inflation rate touching a high of 8.5 percent for August, and to curb inflation, the Federal Reserve has decided to hike interest rates.

In fact, just yesterday, on September 21, 2022, the Fed raised interest rates from 0.75 percent to 3.75 percent, with the expectation of flattening inflation, with a target of 4.40 percent to 4.60 percent in 2023.

“It will take some time to restore price stability and our tools need to be used coercively to better balance demand and supply,” Fed Chairman Jerome Powell Said in his speech.

“Continuous periods of downward trend growth may be required to moderate inflation. In addition, some softening of labor market conditions is likely.

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.

“These are the unfortunate costs of mitigating inflation. But failure to restore price stability will mean far more pain.”

Is Now a Good Time to Refinance Your Home Mortgage Loan?

With interest rates changing, many homeowners are wondering what this means for their mortgage and if it’s the right time to make a change.

The short answer for most people would be “no” at this particular juncture, as it usually makes sense to refinance your loan when interest rates go down.

However, the answer is more complex and depends on a case-by-case basis.

In general, you should consider refinancing your loans when it will save you money and reduce your interest rate by at least 1 percent.

This is because refinancing your loan may cost you money through various charges such as credit report fees, loan origination fees, appraisal fees, etc.

However, if the option of refinancing your mortgage saves you on interest payments or pays off your loan early, you should definitely consider it.

Another factor worth considering is your credit score. If your credit score rises, it may be a good time to consider refinancing your mortgage to get a better interest rate for you.

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