Should you refinance your mortgage? Here are three signs it’s time, real estate experts say

As interest rates surge, refinancing your mortgage has become less common.

However, homeowners eager to lower their monthly payments are wondering when it might be a wise choice to refinance again.

Predicting when the Federal Reserve will lower rates remains uncertain.

Nevertheless, there are three signs to watch for: 1.

**Rates Decline by a Significant Amount:** Wait until rates decrease by at least a full percentage point from your current mortgage rate, as this can make a substantial difference in your monthly payments.

2.

**Rate Drop of 50 Basis Points:** If rates fall by at least 50 basis points (0.5%), explore refinancing options with your lender.

Factors such as closing costs, monthly savings, and how long you plan to stay in your home should be considered.

3.

**Closing Costs Can Be Paid Upfront:** Refinancing involves closing costs, including appraisal and title insurance.

Aim to pay these expenses upfront to avoid paying interest on them over the life of your new mortgage.

Remember, refinancing resets your loan, so closing costs and potentially higher interest rates can be involved.

Therefore, carefully evaluate whether the potential savings outweigh these expenses.

Specifically, FHA loan holders may consider refinancing to eliminate the costly mortgage insurance premium (MIP), which can be substantial and remain in place for the life of the loan.

Despite the recent increases, it’s unlikely that rates will drop significantly below 6% in the near future.

Avoid waiting for super low rates that were prevalent during the pandemic.

Instead, focus on the available opportunities and consult with your lender to determine if refinancing is right for you.