When Should You Consider Mortgage Refinancing?

Refinancing can be an incredible cost saver, and now could be an ideal time to refinance.

Recently, the Federal Reserve began cutting its Federal funds effective rate last year after seeing signs that the economy was starting to slow. When faced with massive economic threats posed by coronavirus pandemic, they decided to lower it all the way down to 0.05%; this rate directly correlates to what banks charge prime customers (known as “prime rate”) plus an additional amount (usually 3-3%); prime rate also is highly correlated to mortgage rates.

Banks have responded by cutting mortgage rates all the way down to all-time historical lows of around 2.75% for 15-year mortgages and 3.33% for 30-year mortgages, respectively. Refinance rates are approximately equivalent to regular home purchase mortgage rates – so refinancing now could save considerable interest payments over time.