All-Time Low

As mortgage rates fall to an all-time low of 4.25% many homeowners are wondering what that means to them. Mortgage rates are driven by inflation and experts say this is bad news for the economy, but good news for long-term rates.

The thought of a lower monthly mortgage payment has many homeowners across the country looking into refinancing their home. But it can be a difficult process. The first step is an appraisal that may not have the outcome you were hoping for.

“People are very frustrated getting that appraisal value back and it’s a lot lower than they had purchased,” said David Buckman, Mortgage Specialist at Wintrust Bank/Naperville Bank & Trust. “The reason for that is a bank does an appraisal, they want to know what they can sell your house for if you go bad the day after you close. That’s the current market it would have to be sold into and that reflects what that neighborhood is going through.”

Mortgage experts caution homeowners to make sure refinancing would be worth your time and money. An appraisal alone could cost you $350. A major factor to consider is how long you plan on staying in the home.

“We won’t be in our house for the next four or five years so the cost for all the fees, the money you have to put out, wouldn’t be recouped in the amount of time that we would have to do that,” said Noel Harvey, Naperville resident. “We already have good rates, we are below 5%, and so it would have to go down even farther.”

“There should be at least a 1% difference between your current rate and the rate you’re going for to make it worth your while,” said Jeffrey Lincoln, Branch Manager for Wintrust Mortgage/Naperville Bank & Trust. “You need to look at the cost and what it will cost you to refinance. Then divide that by how many months it’s going to take you to break even.”

While refinancing may not be worth it in the end, Lincoln and Buckman say if you’re buying a home now is the time to do it.

“If people wait a year and rates go to 5.25% from 4.25%, you lost all that buying power,” said Lincoln. “I don’t think we’ll ever see rates this low again in my lifetime at least.”

“Our economy needs a healthy housing industry to really grow very much and we are not at that point yet,” said Buckman.

Experts also say to get the best rates possible make sure you have a good credit score.

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