By Phil Ganz
Edited by Ryan Skerritt
If you're a homeowner in Florida, you may be wondering if now is the right time to refinance your mortgage.
With recent changes in interest rates and ongoing projections for more cuts, this could be a great opportunity to lower your monthly payments or reduce the total interest you’ll pay over the life of your loan.
Check Your Florida Home Refinance Eligibility
In this blog, we'll break down key factors to consider when deciding whether to refinance.
What the Federal Reserve Rate Cuts Mean for Mortgage Rates
In September 2024, the Federal Reserve cut the federal funds rate by 0.5%, bringing the range down to 4.75% to 5%. This is the first rate cut since early 2020. The Fed has also signaled that more rate cuts are likely by the end of the year, possibly reducing the rate to as low as 4.25%.
For homeowners, this can mean mortgage rates could drop further in the coming months. However, waiting for more cuts isn't always the best strategy. Mortgage rates often move in anticipation of Federal Reserve actions, so it's important to assess your personal financial situation now.
Check Your Florida Home Refinance Eligibility
Is September 2024 a Good Time to Refinance?
Yes, now is a good time to refinance, even if rates may drop slightly later this year.
Here’s why:
The Projected Rate Cuts May Already Be Priced In
While the Federal Reserve plans more rate cuts this year, lenders often adjust mortgage rates ahead of time. So even if there are small cuts in November and December, today’s rates might already reflect those changes. Waiting for a 0.25% drop may not lead to much lower mortgage rates, and acting now could secure better savings.
Locking in Lower Rates Now Can Save Thousands
Refinancing at today’s lower rates can lead to big savings over the life of your loan. For example, a 0.5% drop on a $300,000 mortgage can save you around $25,000 in interest.
Waiting for another small rate cut may not save much per month, and the risk of rates going up could mean you miss out on this opportunity to lock in lower payments.
Refinancing Now Frees Up Cash for Immediate Needs
Refinancing today can lower your monthly payments, giving you extra cash for emergencies or home improvements. If you save $200 a month, that’s $2,400 per year you can use elsewhere.
Waiting for further rate cuts could delay these benefits, making it harder to manage your finances now.
The bottom line is that locking in today’s favorable rates ensures you don’t miss out on savings. Refinancing now can reduce your debt and improve your financial outlook.
Check Your Florida Home Refinance Eligibility
Consider How Refinancing Can Impact Your Cash Flow
Refinancing can have a significant impact on your monthly cash flow, especially if you’re able to secure a lower interest rate. Let’s look at a real example using today’s rates.
If you currently have a $300,000 mortgage at a 6.75% interest rate, your monthly payment (excluding taxes and insurance) would be around $1,945. If you refinance to a new rate of 6.0%, your new monthly payment would drop to about $1,799. That’s a savings of $146 per month.
Now, let’s say you can refinance to a rate of 5.5%. Your monthly payment would decrease to approximately $1,703, saving you $242 per month. Over a year, that’s an extra $2,904 in your pocket. For many homeowners, that could cover unexpected expenses, pay down other debts, or boost savings.
Check Your Florida Home Refinance Eligibility
Why Refinancing Soon Could Save You Time and Money
With mortgage rates hovering around 6.75% to 7.5% for many homeowners, even a small rate reduction can lead to significant savings.
If you act now, you can lock in a lower rate before demand for refinancing spikes, which could cause delays in processing your application.
In Florida, where home values continue to rise, securing a lower rate now could help free up cash flow, reduce your monthly payments, or pay off your mortgage faster.
Waiting too long may mean you miss out on these opportunities as more homeowners decide to refinance, leading to a backlog of applications.
Check Your Florida Home Refinance Eligibility
A Simple Guide to Knowing If It's Time to Refinance in Florida
Wondering if refinancing is a good idea for you? Here’s a straightforward guide to help you decide:
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Review Your Current Situation: Take a close look at your current mortgage rate, monthly payment, and credit score. These numbers will determine what kind of refinance offers you might receive.
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Decide on the Type of Refinance: You’ll need to decide if you want to lower your rate or access some of your home’s equity through a cash-out refinance. Lowering your rate helps reduce your payments, while cash-out can help with big expenses like renovations.
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Consider the Loan Term: Do you want to pay off your mortgage faster or lower your monthly payments by extending the term? Shortening your loan term means paying less in interest over time, but extending it can offer immediate relief in terms of monthly cash flow.
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Compare Lender Offers: Get estimates from multiple lenders to understand the closing costs involved. This will give you a better sense of the overall cost of refinancing.
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Calculate Your Savings: Figure out how long it will take for your monthly savings to cover the upfront costs of refinancing. If you plan to stay in your home for longer than this break-even period, refinancing can be a smart move.
Should You Buy Down Your Mortgage Rate or Focus on Closing Costs?
When refinancing, two key choices are buying down your mortgage rate and how to handle closing costs.
Buying down your rate means paying upfront to get a lower interest rate for the life of your loan. This can save you a lot if you plan to stay in your home for a long time. However, if you're unsure how long you'll stay, it might not be worth it. You should calculate how long it will take to break even on the upfront cost.
For closing costs, you can pay them upfront or roll them into the loan. Paying upfront lowers your overall loan balance, but rolling them in can give you more financial flexibility. “No-closing-cost” options often come with higher interest rates, so it’s important to compare which saves you more.
Your decision depends on your plans and finances. Weigh both options carefully to get the most from your refinance.
Final Thoughts
Refinancing is a big decision, but it can help you lower your monthly payments, free up cash, or eliminate debt faster.
With recent rate cuts and more expected, now is an excellent time to explore your refinancing options in Florida.
Consider your long-term financial plans, the costs of refinancing, and the potential benefits of shortening your loan term.
Taking action at the right time can help secure your financial future and take full advantage of the current rate environment.
With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.
About Author - Phil Ganz
Phil Ganz has over 20+ years of experience in the residential financing space. With over a billion dollars of funded loans, Phil helps homebuyers configure the perfect mortgage plan. Whether it's your first home, a complex multiple-property purchase, or anything in between, Phil has the experience to help you achieve your goals.
About Editor - Ryan Skerritt
Ryan Skerritt has over 10+ years of experience in the residential financing space. With over two hundred and fifty million of funded loan volume, Ryan has the skill set to help any homebuyer configure the perfect mortgage plan.
