U.S. Bank | Best Time To Refinance (2024)

FAQs

What is the best time to refinance? ›

For most borrowers, the ideal time to refinance is when market rates have fallen below the rate on their current loan. If you want to refinance now, calculate the break-even point so you'll know exactly how long it'll take to reap the savings.

You might want to consider refinancing your mortgage in 2024, especially if you got your mortgage in the last year and interest rates fall, or your specific circ*mstances call for a new loan.

One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is enough of an incentive to refinance.

Any time for a simple or rate-and-term refinance; after seven months for a streamlined refinance; after 12 months for a cash-out refinance (can vary by lender). You must have made on-time payments for the past six months; 12 months for a cash-out refinance.

If you do opt to refinance, consider doing it toward the end of the month. This will reduce your closing costs since you will only need to pre-pay interest for a couple of days.

Mortgage rate predictions 2024

The MBA's forecast suggests that 30-year mortgage rates will fall into the 6.5% to 6.9% range throughout the rest of 2024, and NAR is predicting a similar trajectory. But Fannie Mae thinks rates could stay in the low 7% range this year.

So, when will mortgage rates go down? Experts from Fannie Mae and the MBA predict a gradual decrease by the end of 2025. Forecasts indicate that 30-year mortgage rates, currently around 7.1%, might drop to 6.6% by the end of 2024, and further down to 5.9% by the end of 2025.

In summary, it is unlikely that mortgage rates in the US will ever reach 3% again, at least not in the foreseeable future. This is due to a combination of factors, including: Higher Inflation: Inflation is currently at a 40-year high in the US, and the Federal Reserve is raising interest rates to combat it.

What not to do during refinance process? ›

It's a good rule to refinance if you can reduce your interest rate by at least 1%. Mortgage rates naturally rise and fall. But, when the economy struggles, mortgage rates usually fall. Just because interest rates are low, though, doesn't mean it's the best choice for you to refinance.

Don't refinance if you have a long break-even period—the number of months to reach the point when you start saving. Refinancing to lower your monthly payment is great unless you're spending more money in the long-run.

An often-quoted rule of thumb says that if mortgage rates are lower than your current rate by 1% or more, it might be a good idea to refinance.

You can't get a lower interest rate: If your goal is to reduce your interest costs, right now isn't the best time to refinance. You're likely to end up with a higher rate, plus you'll need to cover closing costs on your new mortgage.

While mortgages can be refinanced immediately in certain cases, you typically must wait at least six months before seeking a cash-out refinance on your home, and refinancing some mortgages requires waiting as long as two years.

Rates could continue to decrease if inflation cools, but don't expect a huge drop this year. According to the Mortgage Bankers Association's latest forecast, mortgage rates may fall to 6.5% by the end of 2024.

Mortgage Rate Projection for 2024

As the economy continues to normalize this year, rates should come down further. In the last 12 months, the Consumer Price Index rose by 3.4%, a significant slowdown compared to when it peaked at 9.1% in 2022.