What's Hot: 702,000: DC Sees Population Rise Again In 2024
What Is The Best Spread To Refinance Your Mortgage?
✉️ Want to forward this article? Click here.
Refinancing a mortgage can be a financially savvy move, allowing homeowners to take advantage of lower interest rates or better loan terms. One of the critical factors in determining whether refinancing is a wise decision is the spread between your current mortgage rate and the prevailing market rate. This article will take a look at what the ideal spread is to move forward with refinancing.
The spread represents the gap between the interest rate on your existing mortgage and the current prevailing mortgage rates available in the market. When considering refinancing, homeowners aim to secure a new loan at a rate lower than their current mortgage rate. The difference between the two determines the potential savings and financial advantages of refinancing.
story continues below
loading...story continues above
While there is no fixed rule dictating the optimal spread for refinancing, industry professionals often suggest a rule of thumb. A commonly referenced guideline is a 1% to 2% difference between your current mortgage rate and the market rate. For instance, if your current mortgage rate is 7% and the market rate is 6%, the 1% difference might indicate a favorable opportunity for refinancing.
Determining whether the spread between your current mortgage rate and the prevailing rate justifies refinancing is a multifaceted decision. It involves assessing personal financial goals, evaluating costs, considering the length of time planned in the home, and calculating the break-even point. Consulting with mortgage professionals or financial advisors can assist in making an informed decision.
See other articles related to: interest rates, mortgage rate
This article originally published at https://dc.urbanturf.com/articles/blog/what_is_the_best_spread_to_refinance_your_mortgage/21844.
Most Popular... This Week • Last 30 Days • Ever
If the home ultimately sells for around that list price, it would set a record as the... read »
The federal government could be shut down by the end of today, and that shutdown coul... read »
Right on the heels of a $29 million home along Foxhall Road going under contract to T... read »
New data shows that DC continues to make up for population losses experienced during ... read »
The 16,250 square-foot home along Foxhall Road NW owned by Fox News anchor Bret Baier... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro