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Mortgage Rates: When Should You Refinance Your Mortgage?



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T2022 saw a rapid rise in the rate of inflation worldwide United States of AmericaWith the inflation rate for August rising to 8.5%, and in an effort to curb inflation, the Federal Reserve decided to increase interest rates.

In fact, just yesterday, on September 21, 2022, the Fed raised interest rates by another 0.75 percent to 3.75 percent, with further increases expected to flatten inflation, with a 4.40 percent to 4.60 percent target in 2023. .

“Restoring price stability will take time and require our tools to be used aggressively to achieve a better balance between supply and demand,” Jerome Powell It came in his speech.

“Reducing inflation is likely to require a sustained period of growth below the general trend. Moreover, there is very likely to be some easing in labor market conditions.

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“While higher interest rates, slow growth, and soft labor market conditions will lower inflation, they will also bring some pain to households and businesses.

“These are the unfortunate costs of lowering inflation. But failure to restore price stability will mean much more pain.”

Is now a good time to refinance your mortgage loan?

With changes in interest rates, many homeowners are wondering what this means for their mortgage loans and whether this is the right moment to make the changes.

The short answer for most people is “no” at this particular point, because refinancing your loan usually makes sense when interest rates are low.

However, the answer is more complex and depends on a case-by-case basis.

In general, you should consider refinancing your loans when they save you money and lower the interest rate by at least 1 percent.

That’s because refinancing your loan can also cost you money through various fees such as credit report fees, loan origination fees, appraisal fees, etc.

However, if the option to refinance a mortgage leads to savings in interest payments or paying off your loan sooner, you should definitely consider it.

Another factor worth considering is your credit score. If your credit score has increased, this may be a good time for you to refinance your mortgage in order to get a better interest rate.