To refinance or not to refi💦nance? That seems to 🤡be the question as mortgage rates begin to fall.

The Federal Reserve has held its influential federal funds rate at a two-decade hig💫h for more than a year in an effort to slow inflation. This has pushed up borrowing costs of all kin🐼ds, including mortgage rates.

That's left new homebuyers with high interest rates and little wiggle room to refinance with cheaper borrowing costs. In the second quarter of 2024, refinancing volume was the lowest since 1996, according to Freddie Mac.

However, the central bank has signaled it is likely to 澳洲幸运5官方开奖结果体彩网:cut its benchmark interest rate when it meets in September. Mortgage rates, including those for refinancing, have fallen to their lowest in more than a year and are expected to co𒅌ntinue their de🅘scent.

So, how do you know when it's time to refinance? The answer will depend on your personal goals and finances.

“Trying to time the market is a fool's errand,” said Len Kiefer, deputy chief economist for Freddie Mac. “A better decision, in my recommendation for folks that are thinking about the market, is to take a longer-term view, to consider what their work and family situation is, what's their housing need.”

How Will a Fed Cut Affect Rates?

Banks set mortgage rates based on factors including the 澳洲幸运5官方开奖结果体彩网:10-year Treasury yield, the Federal Reserve's monetary policy, and their peers' offerings. That means mortgage rates coꦕnstantly fluctuate and don't always move in tandem with the fed funds rate despite its influence.

Even when the central bank cuts the fed funds rate, it might not affect mortgages as much as homeowners hope, said Shaun Williams, a private wealth advisor at Paragon Capital Management. Mortgage rates have already fallen in preparation for an interest rate cut and, he warned, owners shouldn't bank on more dramatic moves.

Some homeowners might find rates have already fallen enough for refinancing to be worth their while. Williams suggests his clients wait until they can cut their rate by half a percentage point, but it all depends o🐎n how much time and money they are willing to give up to go through refinancing.

“My clients will say, ‘Well, should we wait a couple weeks? Things are trending down,’” Williams said. “I don't think anyone should do that. Lock it in now."

Look at Your Finances

Experts say you need to be aware of your personal finan💝ces and how refinan♏cing may affect them before going through the process.

While refinancing may save you money in the long run, it comes with upfront costs. Even🐲 though you might save money month by month, you could lose money if the upfront payment is large enough.

"Suppose you have a situation where you were pretty sure you're going to move in the next two years," said Kiefer. "Then even if you were to lower your payment by a month, once you factor in the closing costs associated with the mortgage and the fees, it may well not be advantageous."

Shop Around for the Best Rate

With so many options, experts say the best approach to refinancing is🌳 to shop around for the best rate or find a broker to do that.

"A lot of people do go with [the loan originator] that they know and go with the relationship, but that can cost someone hundreds of thousands of dollars over 30 years, and no friendship's worth that," Williams said.

You or your broker should 🌊look at 10 or 💦more loans to assess the best rate, Williams said.

“Speak with several licensed loan originators and request a loan estimate that outlines the rate, term, and fees associated with the loan you would be potentially applying for,” said Kiefer.