Are homeowners refinancing as interest rates drop?

Yes, as of this week, 9% of homeowners are refinancing their mortgage to match current market rates. That’s 111% higher than the same week a year ago, according to the Mortgage Bankers Association’s weekly survey. 

If you are wondering how your mortgage refinance will look before you decide on one, you can use a mortgage refinance calculator to see what your new mortgage might be. When you are ready to refinance your mortgage, you can start your application online and talk to a Loan Officer. 

One of the main reasons for a mortgage refinance spike is the drop in mortgage interest rates. Refinancing your mortgage if rates are lower could save you money on monthly payments as well as saving more over the life of your loan. With current mortgage rates dropping, it is no surprise that homeowners are choosing to refinance their mortgages. 

Other reasons borrowers refinance their mortgages are to change loan terms, have access to their home’s equity or remove private mortgage insurance (PMI). 

Since Oct. 2, mortgage rates have been on a steady decline, with current rates for a 30-year fixed rate mortgage 6.19%, according to Freddie Mac. This is down 0.08% from the week before and down 0.35% from the same time last year. 

Mortgage rates can change daily. If you are considering a mortgage refinance, make sure you check rates consistently to see if they are lower than the rate you have now. 

There are many types of mortgage refinancing options available for all kinds of needs a borrower may have. These are a few popular refinancing options. 

If you are looking to refinance your mortgage and receive a sum of money based on the home equity you have built up, a cash-out refinance might be your best bet. This option will refinance your current one into a new one with a larger amount, giving you the difference in cash. This refinance will come with new terms that include matching current interest rates. 

If you have extra money you would like to put toward your mortgage, a cash-in refinance is when you put down money at the time of refinancing. This refinance will get you a new mortgage at current rates while potentially lowering your monthly payments.  

A cash-in refinance can also remove any PMI if your loan-to-value (LTV) ratio is 20% or more. 

FHA streamline refinances are specifically for borrowers with an FHA loan hoping to reduce their monthly payments or switch to a fixed-rate mortgage from an adjustable-rate mortgage. These refinances can be a quicker process when refinancing, with less documentation, no home appraisal and potentially without a credit check. 

Similar to an FHA streamline refinance, USDA streamline refinances can come with less paperwork, no home appraisals and is only for borrowers with USDA loans. This refinance removes the typical hurdles that come with a refinance while letting you take advantage of current mortgage rates. 

A VA Interest Rate Reduction Refinance Loan, sometimes referred to as IRRRL or VA streamline refinance, is just for those with VA loans. While many use this loan for rate reduction, like the name suggests, it can also be used to switch your VA loan from an adjustable-rate to fixed-rate mortgage. 

If you are looking to refinance while saving a little money upfront on closing costs, a no-closing-cost refinance lets you roll the refinance closing cost into your new mortgage. This can be through a slightly higher monthly payment or added to your total loan balance.  

This option can be beneficial if you are planning to sell or refinance again in a few years, as it lets you save money on your original refinance. 

If you owe more on your mortgage than your home is worth, a short refinance lets you refinance your home loan to the current market value of your property. This often reduces the mortgage’s principal balance. 

Rate-and-term refinances are the most common type of mortgage refinance. This refinance will replace your original mortgage with a new one that often has more favorable terms. If you are just looking to reduce your current interest rate, switch to a fixed-rate mortgage or lower monthly payments, this refinance may be a smart choice for you. 

Before you start the refinance process, you will want to find the refinance option that is best for your needs. When you figure out which refinance works for you, you will want to check rates to decide if it is the right time to refinance. If rates are lower than your current rate, you could potentially end up paying less every month. 

After that, you can connect with a lender and start an application for a mortgage refinance online! 

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.} 

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