Is it too late to reduce your mortgage payment by refinancing? | Money

Is it too late to reduce your mortgage payment by refinancing? | Money
Written by Publishing Team

STATEPOINT MEDIA – Experts say that with mortgage rates starting to rise, refinancing your home now may be your best chance to lower your monthly mortgage payments, as rates remain near all-time lows.

Those who refinanced in early 2021 already reaped the benefits. Borrowers who refinanced another 30-year fixed rate mortgage during the first half of 2021 saved more than $2,800 in mortgage payments on principal and interest annually, according to a recent research report by Freddie Mac.

But mortgage rates are on the rise. In fact, in October 2021, the 30-year mortgage, the most popular type of mortgage, rose to its highest point since April, exceeding 3.0%. Freddie Mac predicts that mortgage rates will continue to rise, averaging 3.5% for a 30-year fixed term in 2022. That’s up from the 3.0% average in 2021.

So, is it time to refinance your home loan? To help you make an informed decision, Freddie Mac provides answers to common questions about the refinancing process:

• What does refinancing mean? When you refinance your mortgage, you are applying for a new mortgage to replace your existing mortgage, which will result in a new rate, term, and monthly payment. The most common type of refinancing is non-cash refinancing, in which you refinance the remaining balance on your mortgage.

• When should I consider refinancing? In general, refinancing makes most financial sense when average interest rates are at least half a percentage point lower than your current mortgage interest rate. Another reason to consider refinancing is to improve your financial situation, allowing you to get a shorter loan and own your home sooner. Finally, if you currently have an adjustable-rate mortgage (ARM) and it is adjusting upwards, you may want to convert to a fixed-rate mortgage that provides you with the security of consistent payments.

• Is refinancing free? Although refinancing your mortgage can save you money in the long and short term, it’s not free. For the most part, the costs of refinancing are similar to what you paid when you bought your home, including the loan origination fees. There are required services included, such as assessments and state and local fees that can vary greatly based on where you live. The average cost of refinancing is approximately $5,000, so you should carefully consider how long you plan to stay in your home to ensure the savings outweigh the costs.

• Who should handle my refinancing? You do not have to use your existing lender to refinance your loan. In fact, it is in your best interest to shop and compare loan estimates from multiple lenders in search of the best terms and cost. It may take more time, but even a difference as small as a quarter of a percentage point can save you thousands of dollars over the life of your home loan. The good news? Prices are often negotiable. In other words, you can ask lenders to match the rate offered by another lender.

There may never be a time like the present to secure the lowest possible rate and get the highest monthly savings. To see what refinancing can provide you, access Freddie Mac’s Refinance Calculator, along with additional home buying and refinancing resources, at

As with any major financial endeavor, you’ll want to do your homework, look carefully at your short and long-term goals, and work closely with your lender to perform a cost-benefit analysis.


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