Mortgage rates hit a 'sweet spot' — why it's the perfect time to refinance

Thinking about a mortgage refinance loan? There's no way to know when rates will hit bottom, but now may be a good time to get a new loan.

While the Great Recession from 2007 to 2009 was especially hard on homeowners, all signs point to things being different this time around. Although COVID-19 has pushed the country into a recession once again, there's reason to believe home prices will stay relatively stable. And homeowners may actually be in for a big benefit: Mortgage interest rates are very low right now thanks to the Federal Reserve's efforts to bolster the economy by reducing interest rates.

If you're looking to save on your mortgage rate and payment during the coronavirus crisis, a mortgage refinance loan could potentially lower your housing bill substantially. Of course, the impact of a refi will depend on many factors, including whether you can qualify for a new loan at a lower interest rate. Credible can help you to compare rates, loan terms and assess your likely mortgage payment. Visit today to see what a mortgage refinance loan might mean for you.

Is this a good time to refinance a mortgage?

A mortgage refinance makes sense for most homeowners when they can get a lower interest rate on their current home loan -- substantial enough to make paying costs associated with a refi worth it.

Thanks to the Federal Reserve's actions, mortgage rates (and in turn refinance rates) have hit record lows so many homeowners who apply will find that they can qualify for a home loan at a substantially lower rate than the one they have. That could mean that right now is an ideal time to secure a refinance loan.

To see how much you could save on your current mortgage, check out Credible today (where you can compare mortgage lenders and save on interest without any hassle).


Unfortunately, not everyone is an ideal candidate for a mortgage refinance as you need to consider not just outside economic factors but your own situation as well. If you'll be moving shortly, a refinance loan may not make sense because of the closing costs you have to pay. Borrowers staying put for a while can usually make up for closing costs because of the savings on their monthly payments due to the reduced rate on their new home loan -- but that can take several years. If you don't stay put long enough, you may not break even, much less benefit from the mortgage refinance.

Homeowners who have experienced an income cut or a job loss due to COVID-19 may also be unable to qualify for a new home loan as banks tighten lending standards in response to coronavirus-related financial chaos. And those with a poor line of credit may also be seen as a bad borrowing risk so getting a home loan at a lower interest rate may not be possible.


But if you'll be staying in your home for several years, your credit is good, your job situation and savings account is stable, conditions are optimal for refinancing in this low-interest rate market.

Should I refinance now or wait for rates to drop more?

Some borrowers are looking for a mortgage rate "sweet spot" when loan rates are as low as they can possibly be. And there's a chance the mortgage interest rate will fall even further.

To see if mortgage rates have hit the sweet spot for you, visit Credible today and provide some of your basic financial information. You'll be able to see what rates and terms mortgage lenders are willing to offer you based on your current financial situation so you can make a choice about whether refinancing now is right for you.

Unfortunately, no one can predict if that will happen or when. And homeowners who hold out in hopes of getting rock bottom rates may find they miss the boat and don't get their refinance completed before rates start to go up again.


It's always possible that you'll refinance your mortgage and rates will drop the next day. But since rates are so low already, a slight additional reduction likely won't make that much of a difference in total costs or monthly payments. So while you could gamble on mortgage rates going down more in hopes you'll save an extra few dollars, you need to consider the downside risk of that approach.

See how much you could save with a refinance

If you find that there are banks willing to lend to you at a rate well below your current home loan, consider going forward with refinancing. Unless you're confident you can predict when rates will hit rock bottom, passing up on a good deal today might just be a decision you regret.

You can also shop for the most competitive rates and save more on your monthly payments through Credible.