Mortgage Rates Are Rising. Is It Time to Refinance?
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Here's your money briefing for Monday, March 15th. I'm J.R. Weyland for The Wall Street Journal. After hitting record lows last year, mortgage rates have been ticking higher for the past few months. And that's leading some homeowners to wonder if they missed a prime opportunity to refinance.
There's a lot of concern that we're going to be seeing a lot of changes, that people aren't going to know what to expect, which I think is why a lot of people want to lock in a low rate now or make the changes to their mortgage now.
But refinancing isn't for everyone, and figuring that out can involve some tricky math. Our personal finance reporter Julia Carpenter will be here with some key points homeowners should consider before refinancing. That's after the break.
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Many people are refinancing their mortgage before rates go too much higher.
How are current mortgage rates changing and why does it matter?
But does that make sense for you? There's more to consider than you might think. We've got our personal finance reporter, Julia Carpenter, with us to answer some common questions about refis. Julia, thanks for being here.
Thank you so much for having me.
So rates dropped unheard of levels last year. And as these rates are ticking higher, should homeowners who thought about refinancing feel as if they're, you know, chasing a runaway train?
So it's true that rates are now higher than they were last summer. Last summer was historic lows in the twos. And as of last week, rates were at 3.05%. That's according to Freddie Mac. That's the national average. But the important thing for people to remember and something I kept hearing as I was talking to mortgage lenders is that rates aren't going to skyrocket overnight. They are going to be increasing, especially as we see what is hopefully a successful vaccine rollout. a successful rebound from the coronavirus economy that was dominating our headlines last year. But we're not going to be seeing 3.5 jumps all of a sudden. We're not going to be back to four for a while. So there's definitely room for people who've been considering this to take advantage of the opportunity now.
So if somebody does want to refinance or if they might want to but aren't sure, what kind of numbers should they be trying to figure out? Should they grab a pencil and a calculator?
Doing the math is definitely the most important part. Pencil and a calculator is a great idea. There's also a lot of really great calculators out there online. A lot of mortgage lenders provide those on their websites. WSJ has one on its website. The most important number to keep in mind as you're considering whether or not this makes sense for you is the spread or the difference between the rate you have on your mortgage now and the rate you could be getting. And again, you need to talk to your lender. There's other things that go into that But if that spread is wide enough that you think, okay, I could be saving enough money to recoup the closing costs, if I could save enough money that it makes sense for me to stay in the house for the period of time I'm going to be in it, then it makes sense to go ahead and call the lender and file an application before the rates rise that much more dramatically.
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