Why More People Will Be Turning to Mortgage Refinancing in 2024
Mortgage rates stayed high over 2023. Read on for 2024 rate predictions from experts and learn when refinancing could be right for you.
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If you bought a home in the last year or so, the odds are good you ended up with a higher mortgage rate than you wanted, and therefore have a higher monthly mortgage payment. The nice thing about mortgage rates, however, is that they're not forever -- you can apply with a mortgage lender to refinance and swap your old rate for a new one.
Based on the rate forecasts issued by big names in the world of home loans, it seems likely that more Americans will be refinancing in the not-too-distant future. Let's take a closer look at those expert predictions and learn why you might want to refinance in 2024.
What do the experts say?
To preface this section, I want to temper your expectations. The rates we saw during the height of COVID-19 in 2020 and 2021 were unusually low in the history of mortgage loans. So don't get excited thinking that you may be able to swap a 7.5% mortgage rate for a 3% one in 2024. But trusted experts are calling for rates in the 6% range.
Fannie Mae's December Housing Forecast predicted rates as low as 6.5% by the end of 2024. The Mortgage Bankers Association's Mortgage Finance Forecast from December calls for 6.1% at the end of the year. And the National Association of Realtors (NAR) Q4 2023 economic outlook (from October 2023) predicts 6.3% to close out 2024.
None of these predictions are drastically lower than what we're seeing right now -- as of this writing, Freddie Mac notes that the average 30-year fixed mortgage rate is 6.67%. But it is encouraging that none of these outlets is predicting a spike in rates.
Is refinancing right for you?
If you're currently sitting on a 7% (or higher) mortgage rate, 2024 could indeed be the right year to refinance, especially if expert predictions come to pass and we see rates around 6%. There are a few reasons to refinance, chief among them swapping your higher rate for a lower rate, which will save you money. You might also be interested in changing your mortgage terms (say, going from a 30-year loan to a 15-year loan) or type (FHA to conventional, for example).
Finally, you might want to take cash out of your home equity. To do this, you can exchange your existing mortgage for a new one in a higher amount, and receive some of the loan as cash. You can use that money for anything you want, including paying off high-interest debt. Even if you end up with a new mortgage at 6%, that's better than the 20% (or higher) APR you might be paying on credit card debt.
To decide whether refinancing is a good idea for you in 2024, have a sit down with your finances and evaluate. If your credit score has improved since you first bought your home, you'll have a better shot of appreciably lowering your existing rate. If it hasn't, it's worth taking the time to boost your credit score. It's also a good idea to have some cash at the ready, because refinancing isn't free -- you'll need to pay closing costs, just like you did when you got your original mortgage (and likely amounting to the same 2% to 6% of the loan amount).
Be sure to shop around with the best refinance lenders, because rates do vary, and you'll never know how much you can save with a new mortgage unless you have a range of options to choose from. Plus, different lenders charge different amounts for closing costs.
If you've got refinancing on the brain for 2024, you're surely not alone. Take the time to do your homework before applying to refinance, and good luck.
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