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How to know if mortgage refinancing makes sense now
In the post-pandemic era, inflation surged to a multi-decade high and the Federal Reserve responded by raising the benchmark interest rate. Although mortgage rates don’t directly track that benchmark rate, borrowing costs still soared for home buyers.
With low mortgage rates off the table, refinancing became a non-starter for anyone who’d obtained a loan at the 3.00% to 5.00% rates customary between 2009 and 2022. Those who bought homes also got stuck with expensive loans, even after shopping for the best rates.
The good news is, the tides are turning. The Federal Reserve reduced rates at its September meeting, with further reductions expected in the months ahead. Mortgage rates are already down over a point and home loans with rates under 7.00% are now available again for many borrowers.
Aspiring homeowners are beginning to come off the sidelines to buy properties before declining mortgage rates push up real estate prices and existing homeowners who bought properties when rates were higher are now grappling with the question of whether to refinance now or wait.
If you’re in this situation, it helps to know what to consider now.
Start by seeing what mortgage refinance rate you’d be eligible for here.
How to know if mortgage refinancing makes sense now
Not sure if a mortgage refinance is valuable for you now? Consider the answer to the following questions to help narrow down your decision:
Will refinancing improve your financial situation?
Refinancing involves getting a new loan to repay your old mortgage, changing your loan terms in the process. It makes sense to do that only if the new loan you can secure will have more favorable terms.
“The most important question to ask yourself when considering a refinance is, will this refinance improve my life now and in the future?” advises Aaron Gordon, a branch manager and senior mortgage loan officer at Guild Mortgage.
To answer this question, you’ll need to consider whether refinancing will save you money, allow you to accomplish other important financial goals, or both.
“There are many reasons why people refinance their mortgage,” advises Melissa Cohn, Regional Vice President at William Raveis Mortgage. “Lower rates, switching from an ARM to a fixed, the end of an adjustable rate initial lock period, debt consolidation, or cashing out, to name the most popular reasons.”
If any of these apply to you, it’s worth looking at the loan offers out there to see if you can qualify for a new loan that accomplishes your objectives. “With interest rates now 1% lower than they were a year ago, now is a good time to consider refinancing for the reasons given,” Cohn says.
Start exploring your best mortgage refinance options online now.
How long will it take to break even?
While refinancing can have significant benefits in the right situation, it’s not without costs. You’ll want to be sure your new loan is a better deal in the long run even after taking into account fees, which could total as much as 2% to 5% of your loan’s value.
“Refinancing only makes sense if the new interest rate is better than your current rate,” according to Armstead Jones, Strategic Real Estate Advisor at PropertyCashin. “The only time the rate doesn’t matter is if you are pulling equity out of your property.”
If you took out a mortgage in the post-pandemic era, today’s rates may be lower than what you’re paying on your current loan. You may also qualify for a better rate if your credit or other financial credentials have improved. The big question is, just how much lower will that rate be, and will you be in the home long enough to cover the upfront expenses?
“What you’re trying to do is get to a place on the figures where your monthly payment falls by enough to offset the closing costs in a reasonable amount of time,” according to Jon Bodan, president and founder of The Perpetual Financial Group, Inc. and a strategic financing advisor at HouseCashin. “This is called the break-even point and generally if it’s under about 36 months it’s a good deal, provided that you plan to be in the home that long.”
Bodan says you can get a mortgage professional to run the numbers for you. There are also calculators online that can help you do this math.
Should you wait for better rates?
There’s one last important consideration. While you may be able to lower your mortgage rate now, chances are good rates are going to continue to decline for a while. Rushing into refinancing could mean you miss out on opportunities to save even more in the future.
“You may want to wait and see if rates come down further for more meaningful savings,” Gordon says. Of course, while the Federal Reserve has signaled more rate cuts are on the horizon and most experts believe mortgage rates are likely to continue declining, that doesn’t mean these predictions will pan out.
“Some clients that could benefit from the current lower rate environment are holding off – basically thinking rates will continue to decline, so they’re waiting,” Bodan said. “This is possible, but there’s no guarantee.”
Bodan says they generally advise refinancing now if it makes sense based on the numbers, rather than waiting for future cuts that aren’t guaranteed. “Worst case, rates fall some more, and in a year or two you refinance again and you didn’t fully break even on the original deal. Not something you want to be cavalier about, but it’s also not the end of the world. No one can predict what will or will not happen with rates in the future.”
The bottom line
If you can improve your financial situation through refinancing and don’t want to gamble on rates continuing to decline, consider shopping around for a loan today and moving forward to capture the savings available now. As Boden explained, refinancing again in the future is possible, so why not cut costs today instead of waiting for a future rate drop that may never come?
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Miami Beach police: Head found on Key Biscayne belonged to missing swimmer
MIAMI – Miami Beach police have confirmed that a human head discovered on Key Biscayne earlier this week belonged to Victor Castaneda Jr., a 19-year-old swimmer who disappeared while saving his younger sister.
The grim discovery was made Tuesday morning by a worker on the beach behind the Key Colony II Ocean Sound condominium at 251 Crandon Blvd.
Authorities identified the remains as Castaneda, who went missing Saturday after being caught in a rip current at South Pointe Beach.
According to police, Castaneda and his younger sister were swimming when they were pulled out by the current.
Castaneda managed to help his sister to safety, but he was unable to escape the powerful waters himself. Attempts by nearby Good Samaritans to reach him were unsuccessful.
The family announced on social media that a memorial service for Castaneda will be held at 4:30 p.m. Saturday at South Pointe Beach.
Police are continuing their investigation into the circumstances surrounding the discovery of Castaneda’s remains.
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Book excerpt: “A Certain Idea of America” by Peggy Noonan
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In her new collection of columns from the Wall Street Journal, “A Certain Idea of America” (to be published November 19 by Portfolio), Pulitzer Prize-winner Peggy Noonan writes about the history and character of our nation, the remarkable figures who personify the best of America, threats to the social fabric, and the “better angels” of our democracy.
Read the foreword below, and don’t miss Robert Costa’s conversation with Peggy Noonan on “CBS Sunday Morning” November 17!
“A Certain Idea of America” by Peggy Noonan
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Foreword
This is not a book about the day to day of our national political life. It is simply about loving America and enjoying thinking aloud about it.
The columns gathered here are varied in terms of subject matter. They are about the things that endure, and things that deserve to be encouraged. A number of them are about spectacular human beings. As my editor and I read through the past few years of Wall Street Journal columns, if I said, “I really enjoyed writing that,” or she said, “I loved this,” or I said, “This was important to me,” it was in. If not, out. We chose about eighty from more than four hundred. We found ourselves most attracted to themes of history and its pleasures.
The book is divided into seven parts.
“Let Us Now Praise Famous Men” is mostly about great figures and artists of the twentieth century, from Billy Graham to Oscar Hammerstein, from Queen Elizabeth II to Senator Margaret Chase Smith of the state of Maine, and from Tom Wolfe to Bob Dylan, with some side trips to the nineteenth century and the generals of the American Civil War. Looking back on a career of now fifty years, I see that from the beginning what I have loved most, what has most moved me, is writing honest praise.
“I Don’t Mind Being Stern,” on the other hand, is about having fun, as a public writer, taking as big a stick as you can to people and things you are certain deserve it. The U.S. Senate changing its dress code to accommodate a senator who enjoys dressing like a child? Get the stick. Vengeful Prince Harry? Ditto. We were certain a recent Broadway production of Cabaret deserved our stern attention, in a piece whose last line is its summation: “Life Isn’t Merde.” We castigate men who aren’t gentlemen, and admonish parents who, as their personal vanity product, wind kids up to become mindless status robots. Also receiving fire are woke academics who speak garbage thoughts with garbage words. (I am sorry to use the word “woke,” which is boring and sounds merely sarcastic, but the thing is that when you say it, everyone pretty much knows what you mean.) I believe we were the first to compare contemporary social justice warriors with the practitioners of the struggle sessions of the Chinese Cultural Revolution. We enjoyed pointing out that the leaders of the French Revolution were, largely, sociopaths. There’s a piece written in the hours after January 6, 2021.
In “Try a Little Tenderness” we turn to love, which we posit as a very good thing. We call for artists to enter politics. We meditate, after the fire that swept the Cathedral of Notre Dame, in Paris, on the enduring presence and power of religious faith. We unabashedly love, we swoon over and wish to marry, Leo Tolstoy and War and Peace. We mourn for Uvalde, Texas. We talk about the endless drama of men and women, and instruct America that more happens every day in the office than business. Also we declare Taylor Swift an American phenomenon, and if you don’t like it you can just shake it off.
“It Appears He Didn’t Take My Advice” is two columns long. The first, on Joe Biden, was so spectacularly wrong in its central prediction that it made us laugh. Yet looking back five years, it seemed to me in its reasoning to be still oddly pertinent. The second, on Donald Trump, on the eve of the 2016 election, seems to me to have some prescience as to his central problems as a historical figure. Also in the writing of it I remember a feeling of poignance.
“On America” is about the foibles, troubles, and triumphs of our country. It includes the story of my great-aunt Jane Jane, and how, as an Irish immigrant, she came to love her new country. I’d say the general theme of this section is about keeping your poise under pressure. It includes recent college graduates, the Normandy invasion, and the spirited, against-the-grain testimony of an old-fashioned capitalist. Also included, a portrait of the dynamics that produced a political sea change: “The Protected Versus the Unprotected.”
“Watch Out” contains columns about the worries that preoccupy my mind: the dark potentials of AI, skepticism as to the character and motives of its inventors; the possible use of nuclear weapons, and the ongoing dramas in Ukraine and the Mideast.
“We Can Handle It” is about working our way, as a nation, through things that roil us, from the #MeToo movement to the abortion wars, from the creation of a sane foreign policy, to the low state of the American presidency.
This collection draws its title from the famous first sentence of Charles de Gaulle’s “War Memoirs,” most happily translated as “All my life I have had a certain idea of France.” It struck me when I read it many years ago and stayed with me because all my life I have had a certain idea of America, and from the beginning it shaped my thinking and drove my work.
What is that idea? That she is good. That she has value. That from birth she was something new in the history of man, a step forward, an advancement. Its founders were engaged in the highest form of human achievement, stating assumptions and creating arrangements whereby life could be made more: just. In the workings of its history I saw something fabled. The genius cluster of the Founders, for instance—how did it happen that those particular people came together at that particular moment with exactly the right (different but complementary) gifts? Long ago I asked the historian David McCullough if he ever wondered about this. He said yes, and the only explanation he could come up with was: “Providence.” That is where my mind settles, too.
De Gaulle said his thoughts on France were driven as much by emotion as reason, and the same for me. A piece in here dated July 3, 2019, speaks of both:
I’m not really big on purple mountain majesties. I’d love America if it were a hole in the ground, though yes, it’s beautiful. I don’t love it only because it’s “an idea,” as we all say now. That strikes me as a little bloodless. Baseball didn’t come from an idea, it came from us—a long cool game punctuated by moments of high excellence and utter heartbreak, a team sport in which each player operates on his own. The great movie about America’s pastime isn’t called Field of Ideas, it’s called Field of Dreams. And the scene that makes every grown-up weep is when the dark-haired young catcher steps out of the cornfield and walks toward Kevin Costner, who suddenly realizes, That’s my father.
He asks if they can play catch, and they do, into the night.
The great question comes from the father: “Is this Heaven?” The great answer: “It’s Iowa.”
Which gets me closer to my feelings on patriotism. We are a people that has experienced something epic together. We were given this brilliant, beautiful thing, this new arrangement, a political invention based on the astounding assumption that we are all equal, and that where you start doesn’t dictate where you’ll wind up. We’ve kept it going, father to son, mother to daughter, down the generations, inspired by the excellence and in spite of the heartbreak. Whatever was happening, depression or war, we held high the meaning and forged forward. We’ve respected and protected the Constitution.
And in the forging through and holding high we’ve created a history, traditions, a way of existing together.
We’ve been doing this for 243 years now, since the first Fourth of July and in spite of all the changes that have swept the world.
It’s all a miracle. I love America because it’s where the miracle is.
I would say of the above, welcome to my deepest heart.
You’ll see some of the U.S. Civil War here. It has been a lifelong preoccupation and followed my interest in Abraham Lincoln, whose life has gripped me since childhood. He is the only American president who was both a political and literary genius—literally, genius—and about him clung an air of the mystical. He was completely human (homely ways, off-color jokes, depressions, a writer of angry letters) and yet there was something almost supernatural in his ability to be fair, to be just, to be merciful toward his tormentors (the angry letters were thrown in a drawer). What a figure. Tolstoy thought him the greatest man in history.
Religious faith is a constant subtext here because it’s my constant subtext.
Anyway, America. With all her harrowing flaws (we have always been a violent country, for instance) she deserves from us a feeling of profound protectiveness. Our great job as citizens is to shine it up a little, make it better, and hand it on, safely, to the generation that follows, and ask them to shine it up and hand it on. I think that is often what I was trying to do. When you see this I will have been a weekly columnist in The Wall Street Journal for just shy of a quarter century. I am grateful I haven’t run out of opinions.
Excerpted from “A Certain Idea of America” by Peggy Noonan, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © 2024 Peggy Noonan.
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“A Certain Idea of America” by Peggy Noonan
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