The benefits of refinancing locally could make the difference.
In mid-2022, the Federal Reserve began raising interest rates in an effort to reduce inflation. By October 2023, the average 30-year fixed mortgage rate climbed to 7.79%, the highest it had been in the 21st century since topping out at 8.64% in 2000.
Those surges put homeowners carrying high-interest-rate mortgages in a pickle. Before they locked in to the high rate, they may have gotten creative to lower their monthly payments—larger down payments, taking out adjustable-rate mortgages, purchasing mortgage points, etc. But they were still locked into that high rate. And then, the wait was on to refinance to a better rate.
However, the winds have shifted a bit in the latter half of 2024. As inflation fell to 2.5% in September—the lowest it’s been since 2021—optimism about a lower rate environment returned. The Fed responded to this news at its September meeting by cutting the interest rate by 0.50%—the first rate decrease since March 2020. They followed that up with another 0.25% cut in November. Even with news of the likelihood of that first rate cut, lenders had already priced mortgages accordingly. And now that the decrease is official, mortgage rates have dropped to their lowest level since February 2023—and may continue to drop.
Depending on your situation, this may be an ideal time to refinance your mortgage.
“The combination of a volatile economy and significant shifts in rates can give pause to someone who is considering a refinance or a home purchase,” said Mike Lavender, Director of SELCO Mortgage. “But the current rate environment is generally favorable for someone who wants to refinance or buy a new home. Don’t wait for the so-called ‘bottom’ to occur—it’s unknown how long it will take to reach or how low it will go.”
Is refinancing right for you right now?
Even with a modest rate decrease, monthly savings from a refinance can add a helping of security. The additional savings can also be helpful in building an emergency fund or rainy-day fund.
Before making a decision, ask yourself some questions that are always useful before choosing to refinance:
- What would the monthly payment savings be if you refinance to a lower rate?
- What will a refinance cost in terms of fees and other closing costs?
- How long do you plan on staying in your home?
- How many years remain on your current loan?
- Will the savings over time from a lower interest rate make up for the additional upfront costs of refinancing?
“This is when experienced, local help is particularly valuable,” Lavender said. “And SELCO is uniquely positioned to help you understand and manage the volatility.”
SELCO’s experienced mortgage team can help secure the best rate, offering expert advice on the best loan options and terms for you.
But rates are only part of the overall refinance equation.
At SELCO, we work hard to keep fees lower than the Oregon average. And in highly qualified cases, the appraisal could be waived, saving hundreds of dollars from the refinance cost.
“This is important because if lending fees and closing costs are too high, they can overwhelm the benefits of a lower interest rate,” Lavender said.
The local advantage
All real estate is local by nature. Refinancing locally can ensure that your new loan is done on time, correctly, and with as little stress as possible. And when the real estate market is in flux, knowing the community can help get the deal done.
Because SELCO Loan Officers have built local relationships over time, they use local appraisers who will value your property correctly based on unique local market dynamics, so you won’t lose your approval based on a faulty valuation. In addition, familiarity with state rules and title companies guarantees that necessary paperwork is prepared properly and on time.
“We know the communities that we work in because we all live in them,” Lavender said.
In an ever-changing mortgage environment, SELCO Community Credit Union’s expertise will help you navigate otherwise choppy waters.
